We get a lot of people asking about so-called “one-way” auto insurance policies. But is one-way car insurance a good idea, and does it actually save you money? The answer is that it really depends on what kind of car you drive and how much risk you feel like taking – read on to find out if one-way car insurance is right for you.
What exactly is one-way car insurance?
One-way car insurance policies provide Liability and Direct Compensation Property Damage(DCPD) coverage only. With one-way insurance, if you get into an accident that's your fault, your policy will only pay for damages sustained by the other drivers.
That means if you hit another car or run off the road, your insurance won’t cover any of the costs associated with repairing or replacing your vehicle – basically, you’ll be on your own.
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With one-way insurance, you'll also be without any sort of comprehensive coverage, so if your vehicle falls prey to fire, theft or some other hazard, you'll have to pay the damages out of pocket.
Of course, the advantage of one-way insurance policies is that they are cheaper than standard “two-way” insurance plans precisely because they provide a lot less coverage.
Who should consider one-way insurance?
One-way insurance makes sense for budget-conscious drivers who are insuring a car that isn't worth very much. If your car is a clunker and you think it will be cheap to repair or replace, then you may not need a standard two-way policy.
Keep in mind though that even in this scenario, one-way insurance is not without risk – if your car is stolen or wrecked, you’ll have to cover the cost of buying another vehicle!
What if I have one-way insurance and I get into an accident that isn’t my fault?
In most provinces, including Ontario, the DCPD portion of your one-way policy will still cover damage to your vehicle if you get into an accident that is not your fault. Keep in mind though that the other driver has to have a policy from a licensed insurer in the province.
What if I get sued?
If you get sued, the liability portion of your one-way policy will cover a judgment against you up to the limit stated in your policy.
How Much Cheaper Is One-Way Insurance Than Standard Insurance?
The savings you can expect by taking a one-way policy really depend on what kind of car you drive. The more valuable your car is, generally the more you'll save by going with a one-way policy. One-way policies can be more than 50% cheaper than standard policies if you’re insuring a car with a reasonably high replacement valuable.
Whatever kind of insurance policy you choose, remember also that you should compare quotes from a range of car insurance companies. The cost of both one-way and two-way insurance plans can vary wildly between insurers, so it pays to shop around.