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How Car Insurance Coverage Works In Canada

No matter where you live, you need insurance to drive a vehicle in Canada. It is the law. A valid policy is a requirement in all provinces, even though coverage limits vary. For example, your Ontario car insurance plan offers different types of protection than an Alberta car insurance plan.

How you shop for and where you get your auto insurance from also varies. In some provinces you get coverage through a public plan. In others you get it through a private insurer.

All provinces offer a variety of coverage types. Some are mandatory, some are optional. Typically, your policy will include third party liability, accident benefits, and property damage. You have the option to customize your plan. You can add extra protection, endorsements, and increase coverage limits.

Is Car Insurance Mandatory In Canada?

Yes, car insurance is mandatory in Canada. All drivers are legally required to have insurance for their vehicle, regardless of province or territory. Mandatory coverage requirements vary by province, minimum amounts, limits, and optional coverage vary by region.

Car Insurance Is Different In Every Province

In Canada, insurance requirements are unique to the province you reside. Depending on your province you could have public or private insurance. Most provinces use a no fault model, but have different rules and regulations for insurance.

Public And Private Car Insurance

Car insurance is offered in a private or public system. Under private systems, you get insurance coverage from private insurers. In a public system, you get coverage through your provincial government.

Types Of Auto Insurance Coverage Available

The best coverage is not just about how much it costs. It's about finding great value and a policy that gives you the financial protection you need when driving.

Here are the most common types of auto insurance available in Canada :

  • Third party liability : Liability insurance is mandatory across the country and it is the basis for all plans. It covers damage caused to another vehicle or person in a crash. It gives you compensation for medical bills, legal fees, and other related costs.
  • Accident benefits : This form of protection is required in all provinces and territories. It provides you with financial assistance if you are injured in an automobile accident. It doesn’t matter who is at fault. It helps to supplement medical costs not covered under your provincial health care plan. This includes rehabilitation, attendant care, and even income replacement, among others.
  • Direct property compensation damage : DCPD is available in a number of provinces. It covers damage to your automobile, its contents and loss of use where another driver is at fault. It is only applicable in provinces where the coverage is mandated.
  • Uninsured motorist : Get protection against uninsured or unidentified drivers. It is mandatory in all provinces except for Alberta. Get coverage in the event you are injured or killed by an uninsured motorist. You also have coverage if you’re the victim of a hit and run.
  • Collision insurance : Get protection if your vehicle is damaged in a crash. It covers you if you are in an accident with another vehicle or a stationary object. It is optional but well worth adding to your plan.
  • Comprehensive insurance : A crash is not the only way your vehicle could be damaged. This is where optional comprehensive insurance comes into play. Get protection against damage or loss because of non-driving events. This includes damage from falling trees, weather, theft, vandalism, and more.
  • Specified perils : Boost your insurance by adding protection for specific types of risks. You can get coverage for perils such as theft, fire, hail, wind, lightning, flooding, and more. But they must be listed in your plan.
  • All perils : This is a combination of collision and comprehensive coverage. You will have protection from all risks unless they are otherwise specifically excluded from your policy.
  • Roadside assistance : No one wants their vehicle to break down, but it can happen. Emergency roadside assistance provides you with help if your vehicle breaks down or has mechanical issues. It aids with getting your car back on the road. This includes boosting the battery, tire changes, locksmith services, towing, and more. It gives you peace of mind in knowing, help is only a call away.

Mandatory Auto Insurance Required In Each Province

How you get coverage, availability, systems, rules, regulations, and rates are different by province and territory. Plans are available though private insurers and brokers in most regions. Others get coverage through public government run programs.

All provinces require you have at least $200,000 in third party liability coverage (except for Nova Scotia and Quebec) and accident benefits. Some provinces require direct compensation property damage, while others do not. Only Alberta does not require uninsured automobile protection.

The table below illustrates insurance requirements across Canada :

Province or Territory Public or Private No Fault Insurance Minimum Liability Coverage Required Coverage Minimum Driving Age Insurance Regulator
Ontario Private Yes $200,000 Accident benefits, DCPD, Uninsured automobile 16 Financial Services Regulatory Authority of Ontario(FSRA)
Alberta Private No $200,000 Accident benefits 14 Alberta Superintendent of Insurance
British Columbia Public No $200,000 Accident benefits, Uninsured automobile 16 BC Financial Services Authority(BCFSA)
Manitoba Public No $200,000 All perils, personal injury, hit and run, inverse liability 16 Financial Institutions Regulation Branch (FIRB)
New Brunswick Private Yes $200,000 Accident benefits, DCPD, Uninsured automobile 14 Financial and Consumer Services Commission
Newfoundland and Labrador Private No $200,000 Uninsured automobile 16 Superintendent of Insurance
Northwest Territories Private No $200,000 Property damage, personal injury 17 Office of the Superintendent of Insurance
Nova Scotia Private Yes $500,000 Accident benefits, DCPD, Uninsured automobile 16 Office of the Superintendent of Insurance
Nunavut Private No $200,000 Property damage, personal injury 15 Office of the Superintendent of Insurance
Prince Edward Island Private Yes $200,000 Accident benefits, Uninsured automobile 16 Office of the Superintendent of Insurance
Quebec Public and Private Yes $50,000 Accident benefits, Property damage 16 Autorité des marchés financiers (AMF)
Saskatchewan Public No $200,000 Property damage, Personal injury 16 Financial and Consumer Affairs Authority
Yukon Territories Private No $200,000 Property damage, Personal injury 15 Office of the Superintendent of Insurance

What Factors Affect Your Auto Insurance Rate?

The way auto insurance companies determine your rates is unique for each company. Each has their own specific formula they use to assess your risk level and determine your premiums. Some insurers calculate certain variables more heavily than others.

There are variables you can control and others you cannot. Focus on the factors you can control to reduce how much you pay. Insurers generally use the same collection of information, including the following :

  • The driver : You are one of the biggest factors. Your age, gender, and marital status matter. The unfortunate thing is you can’t change the majority of these. Most drivers will see rates drop once they turn 25. Single, male drivers under 25 are the highest risk of getting into a crash. It’s a reason why they pay more than others.
  • Location :You will pay more for insurance if you live in the city. Rural areas tend to pay less. Insurers use your postal code, neighborhood, and region to assess the risk level in your area. They look at statistics for accident and claim occurrences, theft, and fraud to determine the risk level.
  • Vehicle : Your vehicle brand, model, year, age, and features are all used to determine rates. Cars that are expensive to repair or are more likely to be stolen have higher premiums.
  • Driving history : Your personal driving record is a significant factor. How long you’ve been an insured and licenced driver, if you’ve completed drivers training school, and tickets are all considerations. Staying claims free and not having at-fault accidents on your record can help you keep premium down.
  • Driving habits : Do you have a long commute each day? Do you drive infrequently? In general, the more you drive, the more you will pay. Why? The more you are on the road, the higher likelihood you could be involved in a wreck. Notify your carrier if your driving activity changes, especially if you drive less.
  • Coverage needs : Your coverage type, limits, and endorsements will all affect your rates.
  • Discounts and rate reductions : Do you qualify for discounts? Ask your provider about the discounts offered and take advantage of cost saving opportunities to get cheaper premiums. There are dozens of discounts available. They vary by insurers and you may need to meet certain criteria to qualify. Ask for a discount. You might just get one.
  • Your licence : Anyone with less than a full licence will have higher rates. A beginners or intermediate licence like a G1 or G2 has higher premiums because of the increased risk to insurers. You are less experienced behind the wheel and more statistically more likely to get into a crash. Drivers with a full licence have more experience. They are less likely to get into a crash than a younger driver.
  • Insurance company : Your insurance company has a direct impact on how much you pay. Staying with the same insurer without assessing your options could be costing you money. It is recommended to weigh your options when your policy is up for renewal. Get some estimates, compare coverage options, and choose the insurer that best addresses all your insurance needs.

A lot can change in a year. Take the time to review your auto insurance annually. This will help you make the right adjustments to your coverage and ensure you get the best rate. It may be better to stay with your current provider or switch. But you will not know for sure unless you assess your options.

How Much Does Auto Insurance Cost In Canada?

Image a car and Canadian flag with average car insurance rate

Car insurance costs in Canada vary widely from province to province. Where you live will impact your rates. The average annual insurance rates are the highest in British Columbia at $1,832. They are the lowest in Quebec at $717. The average premium for Canadian drivers is $1,244.

Average Car Insurance Premiums By Province

Data from the Insurance Bureau of Canada and Groupement des assureurs automobiles (GAA) provide an overview of the average car insurance premiums by province :

$1,224
$1,832
$1,634
$1,316
$1,232
$1,168
$1,140
$983
$962
$891
$867
$830
$816
$717

Your Car Insurance FAQs Answered

Here are some common questions we get about car insurance :

Auto insurance rates change frequently and vary based on insurance provider. Comparing car insurance quotes allows you to see what the market has to offer – given your driving history, vehicle, coverage needs and other factors. It’s recommended to compare quotes each time your policy comes up for renewal. This will make sure you are getting the lowest rate.

There is not one specific company that offers the cheapest auto insurance rates. There are many considerations used by each company and premiums for coverage can vary. Fees could differ by hundreds of dollars depending on a provider’s risk tolerance and assessment criteria.

In provinces with a private system, insurers can compete for your business. This means there is incentive for them to offer you better premiums. No two insurers are the same. It is in your best interests to shop around. The only way to know for sure who can offer you the cheapest rates is to get quotes from multiple companies.

The more information you provide, the more accurate of a quote you’ll receive. Have this information handy when you get a quote :

  • Postal code
  • The date you need your insurance to start
  • Basic personal information (name, gender, age, phone number, email)
  • Driver’s license
  • Vehicle make, model, year
  • Driving habits (kilometres driven daily, personal or business use)
  • Insurance and driving history
  • Coverage limits requirements

Yes. Where you live will impact your car insurance quote. It is a leading variable used by insurers to assess and determine how much you’ll pay. There are many things associated with your location than can impact what you pay, including :

  • Your province, city, and postal code
  • The insurance system
  • Population
  • Weather conditions
  • Crime
  • Infrastructure and road systems
  • Accident, claims, and fraud in your area

Regardless of where you live, take the time to compare quotes and maximize your savings.

All drivers must meet certain eligibility criteria to be able to get car insurance in Canada. You must meet the following standards :

  • You are a Canadian resident.
  • You are of legal age to get a licence in your home province. You must pass all required tests and have a valid driver’s licence.
  • You are using your vehicle for personal use only.
  • You must provide honest and detailed information on your insurance application. Lying about your personal details is grounds for cancellation.
  • You must not be convicted of insurance fraud in the past 10 years.

These are the minimum requirements to qualify for coverage. A poor driving record or past insurance issues could make it more challenging for you to qualify.

The simple answer is no. You cannot drive without insurance in Canada. While it is not a criminal offense, you face serious fines and penalties (they vary by province). If you are caught behind with wheel without a policy you could face these repercussions :

  • Drivers licence suspension
  • Vehicle impoundment
  • Fines

For example, in Ontario, you could have fines starting at $5,000 for the first offence. You also face a suspension of your licence for up to one year. Plus, you could have your vehicle impounded for up to three months. It is not worth driving without a valid insurance.

Yes. Getting a car insurance quote is 100% free.

It depends on where you get the quote. For some insurers your quote will be valid for 30 or 60 days. Some may be longer or shorter. Speak with your insurance professional to get clarification.

Most drivers will see a considerable decrease in costs once they turn 25. That is, if they don't get any tickets and are claims free. You will also see your rates decrease over time as you build up your insurance and driving experience.

Choosing an insurance friendly vehicle, getting married, and bundling home insurance will also help you save more. You can also expect another drop in rates once you turn 50.

A car insurance deductible is the amount of money you agree to pay out of pocket in the event you file a claim.

For example, let’s say your deductible is $1,000 and your claim cost is $5,000. You would have to pay the $1,000 and your insurer would cover the remaining $4,000.

You can choose your deductible amount and it can vary based on your coverage type. They can range from $500 to $2,000 or more. The amount you choose will have a direct impact on your premiums.

No-fault insurance means that you will deal with your insurer in the event of a claim. Your provider will compensate you for your claim if you are at-fault or not. All provinces have some form of no-fault insurance in place.

How it works varies depending on the rules in your area. For example, some provinces allow you to sue the other parties involved in an accident for damages. The no-fault system is beneficial because to helps to spend up processing time, It ensures people get quick access to medical care.

How Do I Get Cheaper Auto Insurance Rates?

There are many things you can do to lower your rates. These tips will help you save hundreds on your premiums :

Home and auto bundle save 20% promo

Bundle insurance

Instantly save money on your auto and home insurance policies. Simply combine them with the same insurer.

Use a driving app

Get rewarded for driving safe with up to 30% savings. How you drive will determine how much you save.

Usage based insurance app save 30% promo
Icon with 3 cars Insure multiple vehicles

Have multiple vehicles? Combine all vehicles with one insurer and pay less.

Icon with winter tire and snow cloud Use winter tires

Install winter tires and save up to 5% instantly. Drive safe and save!

icon of electric vehicle Drive an electric vehicle

Get rewarded for driving a green vehicle. If you drive an electric or hybrid vehicle you’ll qualify for a discount.

Icon of customer in a hand Be a loyal customer

Loyalty pays in the form of savings. Renew with your current provider to get a discount. The longer you stay, the more you can save.

Icon with 65+ Retiree and seniors

Recently retired? Are you a senior driver? Get reward for your experience behind the wheel. Save up to 10%.

Icon with hands on a steering wheel Complete driver training

Start off driving the right way. Complete a government approved driver training program and save on your insurance premiums.

Driving In Canada And Auto Insurance

Canadian Driving Statistics Canadian driving statistics graph
How Insurance Premiums Are Spent How insurance premiums are spend info graphic
Trans Canada Highway
Trans Canada highway sign
Interesting Facts :
  • It was officially opened on July 30th, 1962
  • It is one of the world’s longest national road
  • It goes through all 10 provinces and unites the country coast to coast
  • It extends from Victoria, BC to St. John’s Newfoundland
  • It passes through many major cities : Edmonton, Calgary, Regina, Saskatoon, Winnipeg, Sudbury, Thunder Bay, Ottawa, Montreal, Quebec City, Fredericton, St. John’s

Check out these facts about driving and car insurance in Canada that can impact how much you pay :

  • There are more than 26 million licensed drivers.
  • There are more than 35.1 million registered vehicles.
  • There were 152,847 accidents in Canada in 2018
  • The number of motor vehicle fatalities and personal injuries continues to drop.
  • The estimated cost of insurance fraud is $1.5 billion annually.
  • 56.9% of every insurance dollar collected is paid out in claims.
  • In 2018, private property and casualty insurers paid out 18.2 billion in net claims incurred to policyholders for all types of auto insurance.
  • PEI, Saskatchewan, and Yukon have the highest accident casualty rates in the country. Ontario has one of the lowest.

Car Insurance Quotes For Top Selling Cars

Shopping for a new car? Check out the insurance rates for some of the most popular vehicles in the country.

Silver Ford F 150

Ford F-Series


Models Sold 145,064
Quote $1,802
Black Dodge Ram Pickup

Dodge Ram


Models Sold 96,673
Quote $1,880
Silver Toyota RAV4

Toyota RAV4


Models Sold 65,248
Quote $2,866
White Honda Civic

Honda Civic


Models Sold 60,139
Quote $3,037
Silver Honda CR-V

Honda CR-V


Models Sold 55,859
Quote $2,584
Silver GMC Sierra

GMC Sierra


Models Sold 54,400
Quote $1,652

Note that data is based on the total average lowest rate for car insurance quotes done on our website for each vehicle in 2020.

woman driving a car on highway
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