Public Insurance vs Private Insurance In Canada
When you buy a car in Canada, you will need to get auto insurance. Depending on which province you live in, you will have to decide between Public Vs Private Insurance. This may come as a surprise to some. You may have never even considered public insurance in your search for affordable insurance. However, it is a fact that in some provinces of Canada, you can get access to public insurance. This applies to those who live in Manitoba, British Columbia, and Saskatchewan. For those who live in Atlantic and Ontario, they can only purchase private insurance. Here is a close examination of the two types of insurance.
Why Does Public insurance exist in Canada?
They do it simply because they can. In Canada, having a car also means you must have insurance. However, the minimum requirements vary depending on the province in which you reside. Not everyone can afford to purchase insurance. Therefore, certain provinces offer basic coverage to those who reside there.
If a province can afford to offer public insurance, it usually does. Others may choose to spend their public funds in other ways such as improving the state of health and education. Public bodies established in each province usually manage this public insurance.
Why You Should Consider Public Insurance
If you are still considering Public Vs Private Insurance, here are a few benefits of why you should consider public insurance for your vehicle. As a car owner, you do not have the option to decide whether you should get car insurance. However, you can choose whether it will be private or public insurance. The greatest benefit of living in a province with public insurance is that you will always be able to afford some minimal insurance. The cost is usually low, but the coverage is also quite limited.
In most cases, the insurance is usually a one size fits all. That means the prices, coverage, and services you can get are fixed. In most cases, only the basic minimum of these services will be offered. However, if you live in Manitoba, this is a bit different.
The Manitoba Public Insurance offers a wide array of options that include Optional Autopac, Basic Autopac, and the Special Risk Extension package. If you live in the province, you will need to have at least Basic Autopac. With this option, you are protected in case of personal injury, third-party liability claims, and all perils. You can choose to step up this coverage with the Optional Autopac package.
What is the Cost of Public Insurance?
For a province to establish public insurance, it is usually estimated to be hundreds of millions of Canadian dollars. This is because the insurance also requires taxpayer subsidies to ensure that it is affordable.
Another cost of public insurance is that it leads to reduced investment by the private sector. Insurers usually prefer to invest in provinces where there is more business. These direct investments include bonds, shares, and in real estate.
The downside to Public Insurance
Besides discouraging investment by private insurers, government insurance does not offer competitive service. Thus, you can only expect to get the bare minimum since they are not very worried about the bottom line and customer satisfaction.
The other downside is that there is limited choice for customers in these provinces. Public insurance provides a one-size fit all option for all its customers. For instance, there are no multiple vehicle discounts or variable deductibles. Since private insurance companies are competiting with each other, they strive to offer the lowest options and various options to their customers. They also work hard to offer the best possible customer service to their customers.
Another downside to public insurance is that there is a lack of innovation. Since they already have a large market share, they do not feel obliged to develop better services. However, private insurers have to be innovative if they want to keep their customers. Thus, they have come up with interesting packages such as replacement cost coverage, roadside assistance, and forgiveness for first accidents.
The Benefits of Private insurance in Canada
With private insurance, you will benefit from free market pricing. This is because companies will compete with each other for your business. Thus, they will be forced to offer the best service possible at the lowest prices. When shopping for private insurance, take time and shop around. Once you get a low quote from one company, ask another company about it. They may agree to lower their prices for you to get your business.
Private insurance takes into account various factors when determining your premiums. This will include your credit history, driving record, and the type of car that you own. Besides that, your age and gender will come into play. If you are an awesome driver with a great credit history, this will get you a low rate. This is usually the main determinant factor when choosing private insurance over public insurance.
Since there is competition in the private insurance sector, they strive to offer more value and choice to their customers. In Canada, most people believe in the free market for almost any product they purchase. In fact, some of the provinces of Canada have deregulated their public monopolies. The result has been more choice and value for those who need car insurance.
Because of the healthy competition between private insurers, their premiums reflect the true cost. For instance, a private insurer will base their premiums on factors that affect the cost of the claims and frequency of the claims. These companies are guided by the cost of the claim when setting premiums.
Another advantage of private insurers is job creation. When they set up in a province, they create jobs, pay taxes, and boost the local economy. Today, the private insurance sector in Canada employs about 118,600 people. These are employed directly by the companies or through a broker workforce. When the competition increases because of an enabling environment, it leads to even more jobs and investment.