The Cost of Being Underinsured: Real Risks of Minimal Auto Coverage

Choosing auto insurance can feel like a tug-of-war between keeping costs low and staying fully protected. In Alberta, drivers must carry a minimum amount of insurance by law—but many people pick the cheapest policy without realizing the risks. At Insureline Empire, we want you to understand what being underinsured really means, and how it can put your finances and your future at risk. 

What Does “Minimal Auto Coverage” Mean in Alberta? 

In Alberta, the law requires every driver to have at least $200,000 in third-party liability insurance. This coverage pays for injuries or property damage you cause to others if you’re at fault in an accident. 

But here’s the catch: 
This minimum coverage does NOT pay for your own vehicle repairs, your own medical expenses, or any other personal losses. It’s simply the lowest level of protection the law allows—and it leaves huge gaps. 

Many people think $200,000 sounds like a high number. Unfortunately, when it comes to real accident costs, it’s very small and can run out extremely fast. 

What Happens If You Cause an Accident With Only Minimal Coverage? 

Picture this: you’re involved in a multi-vehicle collision and found at fault. With only $200,000 in liability coverage, everything above that amount comes out of your pocket. 

Here’s where the costs can explode: 

1. Medical Bills 

A serious injury can cost hundreds of thousands of dollars—sometimes millions. If more than one person is hurt, the bill climbs even higher. 

2. Lost Wages & Pain and Suffering 

Injured people can claim compensation for income they lose and for long-term pain or life-changing injuries. These settlements can easily go far beyond Alberta’s minimum coverage. 

3. Property Damage 

Think about hitting: 

• a luxury vehicle 

• a commercial truck 

• public property like a building, power pole, or bridge 

Repair costs can quickly climb into the hundreds of thousands. 

Once your $200,000 limit is used up, the remaining amount becomes your personal responsibility. This can lead to: 

• loss of savings 

• seizure of assets 

• liens on your home 

• long-term debt 

For this reason, we always recommend at least $1,000,000 to $2,000,000 in liability coverage. The extra cost is surprisingly small compared to the massive financial protection it provides. 

What Basic Coverage Doesn’t Include 

If you only carry the minimum, you’re missing two major protections: 

No Collision Coverage 

If you cause an accident, you must pay to repair or replace your own vehicle. If your car is written off, that loss comes directly from your pocket. 

No Comprehensive Coverage 

Without this coverage, you’re unprotected against: 

• theft 

• vandalism 

• hail damage (very common in Alberta) 

• fire 

• flooding 

• falling objects 

Basic accident benefits also cover only limited medical care. For serious injuries, this coverage often runs out quickly. 

A Real-Life Example: The High Cost of Being Underinsured 

Imagine a driver with minimum coverage runs a red light and hits another vehicle. The other driver suffers a spinal injury and needs surgery and years of rehabilitation. 

Total claim amount: $1.5 million 
Insurance pays: $200,000 
Driver must pay: $1.3 million—personally. 

This unpaid amount can lead to: 

• wage garnishment 

• forced sale of assets 

• long-term financial strain 

This isn’t a rare situation—serious accidents often cost well over the minimum limit.

The Long-Term Consequences 

Being underinsured affects more than your wallet today. After a major claim, insurance companies may see you as high-risk, making it harder or much more expensive to get coverage in the future. 

The small savings you gain today can quickly turn into years of financial stress. 

How Insureline Empire Helps Protect You 

At Insureline Empire, we focus on building protection—not just selling policies. We take the time to understand: 

• your budget 

• your driving habits 

• the value of your vehicle 

• your overall financial situation 

Then we create a plan that actually protects you. 

We often recommend: 

• higher liability limits 

• collision and comprehensive coverage 

• optional endorsements like new vehicle replacement or rental car coverage 

These added protections fill the gaps that basic policies leave behind and keep Albertans financially secure on the road. 

Final Thoughts 

The legal minimum insurance in Alberta is only a starting point—not a safe level of protection. Being underinsured can put your savings, property, and future earnings at risk. 

A few extra dollars per month can be the difference between a manageable claim and a life-changing financial burden. Protecting your future requires smart, complete coverage—not just the minimum.  

For more insights, feel free to contact us or call us at 780-761-2200.