Auto Insurance in Canada

What is Auto Insurance?

Automobile insurance is the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the insured’s vehicle itself incurred as a result of traffic accident. Another use is to provide protection against losses incurred as a result of theft, vandalism, or some other event that causes damage, liability or injury where the vehicle is involved.

Where can I get the basic coverage?

In the Northwest Territories, Yukon, Nunavut, Alberta, Ontario, New Brunswick, Newfoundland and Labrador, Prince Edward Island, and Nova Scotia you will have to purchase your car insurance coverage through a private insurer.

In British Columbia, Saskatchewan and Manitoba, the basic auto insurance policy is purchased through a government agency. In these provinces, drivers usually purchase their insurance coverage when registering the vehicle. You may also be able to purchase extra options and coverages that go beyond the basic policy. These can be bought either through the government agency or if in British Columbia for example, you can choose to purchase this portion through a private insurer.

In Quebec, your basic insurance coverages are provided by two sources; the government agency Société de l’assurance automobile du Québec (SAAQ) and private insurers. The government agency provides coverage for Quebec residents who sustain bodily injury in an accident. This coverage is funded through premiums collected as part of the fees for vehicle registration and driver licensing. All other auto insurance coverages, including the mandatory Civil Liability coverages, are purchased through private insurers.

Validity of your insurance

Your insurance is usually valid anywhere in Canada and the United States, unless stated differently. It’s a good idea to carry whatever proof of insurance you are given at all times because you must produce it if a police officer requests it, when you first register your automobile, and each year when you renew your licence plate sticker. If you decide to drive into Mexico however, your insurance policy won’t cover you or your automobile. You must arrange for insurance coverage separately when, and where, you enter Mexico.

You are not required by law to purchase car insurance to cover damages to your automobile. But if you have a newer automobile, you’ll want to protect your financial investment and consider purchasing Collision and/or Comprehensive coverage. Additionally, if you’re leasing or financing your vehicle, the leasing company or bank will often require you insure your car or truck for Collision and Comprehensive coverage. They will not release the funds to purchase the automobile until you commit to that coverage.

What is the Required Coverage?

Each province and territory in Canada establishes their own required minimum insurance coverages. However, you can often get options that go beyond the basics. One of the nice things about automobile insurance is you can customize your policy to ensure you’ve got the specific protection you need, without paying for extra insurance you may not require.

Accident Benefits coverage

Accident Benefits coverage is compulsory everywhere in Canada except Newfoundland and Labrador. It provides for you, your passengers or pedestrians who are injured or killed in an automobile accident. Accident Benefits coverage varies between the participating provinces but in general provides compensation for medical and rehabilitation treatments, funeral expenses, loss of income due to disability and death. In Quebec, Accident Benefits coverage is provided by the government.

Collision coverage

Collision is an optional coverage that if part of your policy protects your vehicle if it is damaged in an accident. Often drivers of older vehicles choose not to purchase Collision coverage because the cost of including it on the policy can be higher than the value of the vehicle itself.

Comprehensive coverage

Comprehensive coverage, like Collision, is optional. It protects your car against loss or damage resulting from something other than a collision or your policy’ exclusions. Comprehensive coverage usually applies in the case of loss or damage from falling or flying objects, theft and vandalism.

What are exclusions? Exclusions usually include, but are not limited to, mechanical fracture or breakdown, rust, corrosion, wear and tear, and freezing.

Direct Compensation - Property Damage

In Ontario, Quebec and New Brunswick, Direct Compensation - Property Damage coverage provides for damage to your car and any of your property inside the car, because of an automobile accident where you are not-at-fault or partially not-at-fault.

Family Protection

Family Protection coverage provides coverage for you and your family from the actions of an at-fault, uninsured or underinsured driver. If available in your province (it is not currently in Quebec), Family Protection coverage ensures that you and your family are covered if you are injured in an accident up to your own policy’s limits regardless of the other person’s coverage levels.

Uninsured, Underinsured or Unidentified Motorist coverage

This coverage is universal across Canada. While it may be called something different, or split into two or more coverage types the principles are the same. Uninsured, underinsured or unidentified motorist coverage provides payment (the amounts vary among the provinces) if you are injured or killed through the fault of an uninsured/underinsure driver, or by an unidentified vehicle like in a hit-and-run.

Limited Waiver of Depreciation

If you have a brand new car, still within the first 24 months of the original delivery date, this optional coverage ensures you will receive the full value of what you paid for the car — without depreciation if it is written-off. If your car can be safely repaired, your insurance company will arrange for necessary repairs.

Loss of Use coverage

Say you’re involved in an accident and your car is damaged. Your Loss of Use coverage pays for a rental car or alternate transportation (like taxi or train fares) while your automobile is being repaired. Loss of Use coverage is optional.

Third-party Liability Coverage

Third-party liability (known as Civil Liability in Quebec) covers you if you are held legally liable if your vehicle injures someone else or damages his or her property. If you are held liable for more than your coverage, you can be held personally responsible for the balance. Third-party liability coverage is compulsory in all provinces and territories in Canada, although the minimum amount of coverage needed may vary by province.