Your Insurance in a Serious Auto Collision

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Getting in a car collision is, at best, stressful and, at worst, devastating. If you get into an extremely serious collision, such as a head-on collision on a highway, or hitting a pedestrian in a crosswalk, serious bodily injuries and property damages are likely to occur. It’s times like those where having proper coverage is priceless.

But car insurance isn’t the only thing that matters when in a collision. This is how your optional insurance coverage (like Life or Disability insurance) comes into play when you get into a serious crash, as well as your auto policy:

Auto Insurance

There are three parts to Auto Insurance: Third party liability, Accident Benefits, and optional coverage such as Collision or Comprehensive.

Third party liability (sometimes called “Part A”) covers you if you are responsible for bodily injury or the death of another person or damage anyone else’s property. It is the type of insurance you need to have to legally drive on the road, as mandated by the government.

Accident Benefits  (also known as “Part B”) covers personal bodily injury. It is part of the insurance you need to have to legally drive on the road, as mandated by the government. It provides coverage for medical and funeral expenses, benefits for death or total disability and uninsured motorist coverage.

While third party liability covers damage to other people’s property, Collision/Comprehensive (“Part C”) covers damage to your own property. This coverage is optional, but highly recommended.

Part A: Third Party Liability Examples
  • You destroyed the other driver’s car. It is a total write-off.
  • The passenger in the other car has been injured or killed.
  • The passenger in your car has been injured or killed

Auto insurance (third party liability) will come into play. This situation is one of the reasons it may make sense for you to carry a high liability limit (they go up to $2 million), as opposed to the minimum, which is only $200,000 in Alberta.

Part B: Accident Benefits Examples
  • You’ve injured yourself or your passenger
  • You or your passenger die in the crash
  • You or your passenger are injured or killed by a vehicle that has no insurance or the owner of the at fault vehicle cannot be identified.

Auto insurance (Accident Benefits) will come into play.
Its purpose is to provide immediate coverage for medical expenses (it is paid regardless of who was at-fault for the collision) or to provide a benefit in the case of total disability. A variety of medical expenses are covered including ambulance, medical and dental, chiropractic, physical therapy, psychological, massage therapy, just to name a few.

Part C: Collision or Comprehensive Examples
  • Your car is completely destroyed, and will need to be replaced.
  • Your car is damaged and will need repairs.

Auto insurance (collision or comprehensive) covers replacing your totaled car.
If you have SEF 20: Loss of Use on your policy, you’ll also get a rental car to drive until yours is replaced/repaired.

Disability Insurance

Disability Insurance helps provide for lost income if you cannot work due to a disability.

Examples
  • You injure your spinal cord and can no longer perform your job as a mail carrier
  • You get whiplash and develop painful symptoms and migraines that interfere with your office job
  • You seriously injure/kill someone in the car collision, and have to take a leave to deal with trauma and stress

Disability insurance will cover all of these scenarios. However, AMA offers a lot of different plans that have different limits on coverage and stipulations for qualification. An advisor can help you choose what’s best for you.

Personal Accident Insurance

Personal Accident Insurance (PAI) provides a lump-sum payment to you or your beneficiary in the event of disability/limb loss or death caused from an accident.

Examples
  • Your arm is crushed in the collision and needs to be amputated
  • You experience a spinal cord injury and lose the use of your legs
  • Your spouse loses the use of an arm or leg or their hearing or sight.
  • Either of you is killed in the collision

If you carry Personal Accident Insurance, it also covers your spouse at 50 per cent of your benefit.
If you are injured or killed, your PAI coverage pays out 100 percent of the benefit. It will pay out in a one-time lump sum, unlike disability insurance. Also, it does not matter if you can still work after the car crash — PAI still pays out.
If your spouse is injured or killed, your PAI coverage pays out 50 per cent of the benefit, to you because you’re her beneficiary. It will pay out in a one-time lump sum.

Long-Term Care

Long-term care insurance is a simple, affordable way to help cover the costs of care that you or your spouse may need in the event of chronic illness or disability or simply due to the normal effects of aging.

Examples
  • Imagine the car crash were to result in a serious spinal/brain injury.
  • Your brain injury results in you needing round-the-clock care, so your family helps you move to a nursing home.

Long-term care insurance would help cover the cost of your care. Care homes are not covered by the province and would be very expensive for your family, especially if they want you in a high-quality facility.

Life Insurance

Life insurance provides money to the people you choose (your beneficiaries) in the event of your death.

Examples
  • You pass away in the collision

Life insurance will pay out to your beneficiaries at this time.
If you had something like Term life insurance, it might help replace your income or pay off your mortgage for your spouse
If you were older and had whole life insurance, it might pay out to your spouse or children, providing them with an inheritance

If you want to add any of the above insurance products to your safety net, contact one of our advisors. They can help you choose the perfect mix of products to make sure you’re safe and protected beyond what your car insurance policy provides.

Want to learn how to avoid auto collisions in the first place? Check out Safer City Driving tips from AMA’s Insider Magazine.