So, you've recently passed your driver's test and are ready to get behind the wheel of your car and hit the open road. Congratulations, think about all the adventures that await you! Before you start up your engine, you're going to need to do one important task, and that's purchasing mandatory auto insurance.
A car accident can happen at any time, and if you don't purchase auto insurance you could suffer numerous legal and financial consequences. Stick around to learn more about why car insurance is an absolutely essential part of owning and operating your own vehicle.
Is car insurance mandatory in Canada?
It sure is! No matter what province or territory you live in, you'll need proof of insurance to travel anywhere throughout Canada. That being said, what a lot of drivers don't know is that car insurance is not federally regulated.
So, what exactly does this mean for you? Well, depending on where you live, you'll need to follow the specific coverage minimums set out by your provincial governments. Here is a closer look at mandatory and optional car insurance coverages below:
Mandatory coverage
In Canada, auto insurance is required in order to protect drivers, passengers, and cars from the financial hazards associated with driving. Mandatory car insurance policies you'll need to have in your portfolio include:
Third-party liability
In Canada, third-party liability insurance is arguably one of the most important policies you'll need to have. It offers financial protection in the event that you cause bodily injury to a passenger, pedestrian, or other motorist or cause property damage while operating a vehicle.
For example, if you cause a car accident that injures a pedestrian, your liability insurance plan will cover repair costs, legal fees, medical costs, and other expenses that result from the incident. Provinces in Canada have different minimums for this type of car insurance policy. For example, in Ontario, motorists are mandated to purchase a minimum of $200,000 in coverage, whereas in Nova Scotia the minimum is $500,000 in coverage.
Direct compensation - property damage coverage
As long as the person who purchased the insurance is not at fault for the crash that resulted in the damage, direct compensation - property damage coverage will provide coverage against property damage to an insured car and the driver's personal belongings.
With this kind of insurance coverage, your insurance provider often covers the cost of your car's replacement or repairs outright, rather than you having to go through the other motorist's insurance company.
Uninsured automobile coverage
If you and any passengers in your car are involved in a collision with an at-fault driver who is either underinsured or is hit by an uninsured driver, you will have full protection under this auto insurance coverage. This coverage also extends to hit-and-run incidents where the other driver leaves the scene of the accident.
Accident benefits
Accident benefits is a final type of automobile insurance that is mandatory for all Canadian drivers.Accident benefits coverage is meant to help those who are injured in an accident receive medical attention. This coverage extends to the driver, and passengers in the vehicle, and pedestrians, regardless of who is found at-fault.
This car insurance policy can assist in covering medical bills such as prescription drugs, physical therapy, or rehabilitation that might not be covered by health insurance, as well as the loss of income during your recovery.
Optional coverages
Beyond mandatory coverage, most drivers opt to additional coverage on top of a basic insurance plan, including the following:
Collision coverage
Regardless of who is at fault in an accident involving another vehicle or object on the road, collision coverage can help with the associated expenses. This includes any repairs or replacements of your vehicle.
Comprehensive insurance coverage
Comprehensive insurance protects policyholders against a wide range of unexpected incidents beyond car accidents. Ultimately, if an insured risk caused damage to your car, this car insurance will pay the cost of repairs or replacements.
For example, common events insured under this car insurance policy include, water damage, theft, vandalism, and falling objects. Make sure to ask your insurance company what is considered a covered peril in your comprehensive coverage policy as it can vary between insurance companies.
Accident forgiveness insurance
Accident forgiveness is the last optional coverage option that can be beneficial to Canadian drivers. For first-time drivers, this kind of coverage is usually recommended since it keeps your insurance provider from increasing your insurance premium following your first at-fault accident.
Is it illegal to drive without insurance in Ontario?
Yes, driving without insurance in Ontario is illegal and will lead to serious consequences if you are pulled over and you are unable to produce proof of insurance. Here is what could happen when you're driving without insurance in the province:
Monetary fines
Driving without car insurance in Ontario can lead to substantial fines. For your first offence, the fine ranges from $5,000 to $25,000. For any incidents following your first offence, you can anticipate paying up to $50,000, which, for most Canadians, can significantly impact their financial well-being.
Licence suspension
Next, if you are caught operating a vehicle without insurance, you may lose your driving privileges for up to a year. This can impact your ability to get to work, get to school, or perform any other activities day-to-day.
Vehicle impounded
Law enforcement has the right to impound your vehicle. This means your car can be taken to a storage lot. During the time that it is parked there, you will pay a daily fee, and you will also be charged a fee for the towing of your vehicle. Ultimately, getting your car home can be costly and inconvenient.
Higher premiums
The last consequence of driving without insurance is that the incident will not only go on your driving record but will also result in more expensive insurance payments, given that most insurance companies will deem you a higher risk to insure.
Can I drive a car without insurance if I just bought it in Canada?
If you just purchased a new vehicle from a car dealership and are wondering how you're supposed to get your car home from the lot without insurance, you're likely not alone in this. When you buy a car, you need to immediately contact your insurance company to inform them and arrange coverage.
Oftentimes, you may be able to purchase car insurance for your new ride in advance if you know the exact details of the car you're purchasing. On the other hand, some insurance companies offer a temporary coverage or a grace period for new vehicle purchases and will likely request proof of insurance for this grace period. Just keep in mind that it again, needs to be done ahead of time.
Can I drive someone else's vehicle if I don't have car insurance?
Yes, you are able to drive someone's vehicle if you personally do not own car insurance yourself, should they provide you permission to operate their vehicle beforehand. For example, if your parents ask you to go to the store and pick up some ingredients for dinner and you have your driver's licence, you will be able to. However, it is important to know that when they are lending their vehicle, they are also lending their insurance policy.
What happens if someone hits you and you don't have insurance in Canada?
Driving in Canada without insurance and getting into an accident that isn't your fault can still lead to significant fines, the suspension of your licence, vehicle impoundment, and other consequences.
In provinces with no-fault insurance, like Ontario, you might be eligible for some benefits, but it won't cover the entire cost of medical expenses and other costs that arise. The best thing you can do is have valid auto insurance, no matter how little or often you drive. It's the law, and it's better to be safe rather than sorry in the end.
What provinces currently offer public or private car insurance?
Canada has both public and private car insurance options, depending on which province and territory you live in. Public car insurance is overseen by government-run agencies. Provinces with public insurance systems include British Columbia, Saskatchewan, Manitoba, and Quebec. This means that all drivers in these provinces have to purchase car insurance from a single agency, preventing them from shopping around with different car insurance companies for the best rates and coverage.
In contrast, provinces that have private insurers include Alberta, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, Yukon, Nunavut, and Newfoundland and Labrador, which allows drivers to compare prices and policies.
Why you need high-quality car insurance
Having car insurance is essential for numerous reasons that go beyond it being mandatory for all Canadian drivers including:
- If someone injures themselves in an accident, your insurance company will pay for all medical bills, loss of income, and other fees associated with your recovery, which could otherwise cost thousands of dollars of money out of your own pocket.
- If you're found at-fault of an accident and someone files a lawsuit against you for damages, you won't have to pay for lawyer fees, settlement costs, or other expenses that again, could significantly impact your finances.
- Having insurance with a reliable insurance company also provides peace of mind knowing you're protected on the road.
What factors impact car insurance rates in Canada?
While many insurance companies use different rating scales when calculating the cost of insurance premiums for drivers, there are certain factors that most will take into account to assess the level of risk each driver will be to insure. Some of these factors include:
- Where you live and work.
- How old you are.
- Your gender (men are more of a risk than women).
- The make and model of vehicle you drive.
- Your past driving record.
- How many years of driving experience you have.
- Whether or not you have any past insurance claims.
- How many kilometers on average you drive a year.
- What your previous car insurance policies were.
- Your marital status.
- Your deductible amount you choose (Higher deductibles yield lower premiums).
- How often and what you use your vehicle for (work, personal).
- Whether you qualify for any discounts.
If you're looking to buy car insurance, the best thing you can do is shop around and compare different car insurance premiums. This can help you find the most affordable car insurance premiums without sacrificing the level of coverage you have.
When working with a car insurance company or insurance policy broker, don't forget to ask them whether you qualify for any discounts. Many companies offer discounts when you bundle your home and car insurance with them, are a member of an organization, have safety features installed on your car, install winter tires, and others! If you're able to, paying for your entire premium up front can also help you save as it gets rid of the cost of monthly administrative fees that companies bill each month.
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With offices across Canada, BrokerLink may be in your neighbourhood! Come visit us in the office to work with an experienced insurance representative, or give us a call during regular business hours! Need quotes right away? Use our free online quote tool for competitive auto insurance policy quotes right at your fingertips!
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