It’s More Than a Piece of Pink Paper.

When most people first buy automobile insurance, they do it not because it’s the right thing to do, but rather because it’s a requirement to register the vehicle and get plates. For first car buyers, the insurance is more often than not seen as an obstacle to driving the vehicle. Why are we required to have insurance? In Ontario, the Compulsory Automobile Insurance Act requires that all individuals who operate a motor vehicle to provide proof of financial responsibility. Proof of financial responsibility is what your insurance provides you with. It confirms to society that if you are responsible for damages to another person or property that you will be able to respond financially in order to make things right. In Ontario, the minimum legislated limit is $200,000. In practice, we suggest that you buy as much as you can reasonably afford, but no less than $1,000,000.

In the event that a person is operating a vehicle that is not insured, they run the risk of permanent financial ruin. Yes, the Police may stop the individual and they may charge them, however the real risk isn’t the Police. The real risk comes from the uninsured individual getting into an accident with another party and causing injury or damage. Without insurance, there is no coverage for legal defence costs, no coverage for injuries, and last but not least, no coverage for the vehicle itself.

If convicted of the offence “Drive with No Insurance” the individual will have on their drivers abstract a charge which will remain for 3 years from the date of conviction. The conviction is considered one of the worst as far as the insurance industry is concerned. Most insurers will refuse to insure them. The remaining few that will insure this conviction will do so at very high rates which will also be surcharged. The astronomical premiums are in addition to the fine imposed by the courts, usually a minimum of $5,000.

Most people that I’ve met who have driven without insurance, usually cite affordability as the main reason they have run this risk. The truth is, a vehicle, while being a modern convenience is still a luxury item with costs associated with it. In the end a vehicle is either affordable or it isn’t.