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Back to the basics - car and truck insurance

Car insurance may seem complicated, and the policy may seem intimidating with the length and language of the policy wordings. Yet, at its core, car insurance involves three basic components: third party liability coverage, collision coverage and comprehensive coverage.

Third Party Liability Coverage
Let’s have a look at liability coverage. Coverage will protect the insured in the event that they are found legally liable for causing bodily injury or property damage to a third party. Liability insurance is mandatory in Alberta.

Collision Coverage
Collision insurance is optional in Alberta, and if purchased it covers the insured vehicle itself for cost of repair or replacement (up to the fair market value minus the deductible) due to damage resulting from a collision or upset.

Comprehensive Coverage
The other main optional coverage is comprehensive insurance, which covers damage to an insured vehicle that was not the result of a collision. Examples of perils often covered under comprehensive insurance are fire, theft, flood, vandalism and hail.

How to decide if collision and comprehensive coverage is right for you?
The value of the vehicle is a significant factor in deciding to purchase collision and comprehensive coverage or not. In the event the vehicle is damaged, the most the company will pay out is the fair market value of the vehicle at the time of loss, minus the deductible. For a vehicle with a low value because of age or condition, the payout may be less than the cost of insurance. The insured will have to weigh the costs against the benefits.

If the car is newer, then it may pay to protect the investment with collision and comprehensive coverage. If there is a bank loan attached to the vehicle, or it is leased, collision and comprehensive coverage are required.

Other variables you might want to consider when determining the right coverage for your vehicle might be road conditions, traffic conditions and whether you commute to and from work. Western Financial Group brokers will find a company for you that will provide the right coverage at the best value.

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