Car insurance in Canada

It’s illegal to drive your car without insurance in Canada—not to mention, insurance is there to protect you as the owner/driver. So, it's a good idea to understand how car insurance works and what type of insurance you need to purchase before you hit the open road.

But car insurance can be tricky, especially if you're new to buying car insurance in Canada. If you're wondering what car insurance is, what coverage options are available to you, and how to get insured, in this article we'll go over some common car insurance questions to help you get a better grasp on the topic.

Car insurance is mandatory, which means vehicles must have insurance before they can be driven. The purpose of this insurance is to protect you from the financial loss that comes with any potential accidents. For example, having car insurance can help protect you if you're held responsible for an accident that causes damage to another person or their car.

Apart from the mandatory coverage that's required by law, there are also optional coverages you can add to your policy to give you extra protection. Depending on the optional coverages you choose, this additional coverage might even protect you from having to pay for your own car's damage as a result of an at-fault accident. 

Once a contract is made between you and your insurer, you'll be responsible for paying a premium which will keep your car insurance policy active and ready should anything happen to you and/or your car.

Keep in mind, though, your policy should reflect all drivers and their proper assignment. Here's what this means: If, for example, you're licensed and don't have your own car, but you frequently drive someone else's car, you should be added to that person's car insurance policy in order to be properly protected. If, on the other hand, you've leased or financed your car or bought it outright, you'll need to purchase a car insurance policy for your own car before driving it.

Because it changes from province to province, there isn’t a one size fits all answer to this question. And, although car insurance is mandatory from coast to coast, it's regulated on a provincial level, not federally.

Plus, car insurance in Canada is divided into public insurance and private insurance. And, to keep things interesting, one province (Quebec) runs on a hybrid of both systems. Let’s see examples of these different types of systems and how they differ.

Public car insurance means that the company that provides insurance for your car (and everyone else in that province who buys car insurance) is a government-owned corporation. You may also have the option to increase your coverage with a privately-owned, publicly traded, or mutual insurance company.

Private car insurance means that the companies that offer insurance to you (and everyone else in the province) are privately owned, publicly traded, or mutual companies. For example, TD Insurance is a wholly owned subsidiary of TD Bank, which is a publicly traded company, and we offer many different types of car insurance coverages.

The government administers car insurance in British Columbia, Saskatchewan, and Manitoba. Quebec has a hybrid system, where a public insurer manages insurance for bodily injuries, while private insurers provide other coverages (for example, Civil/Third Party  Liability, Collision or Upset and/or Comprehensive).¹ In all the other provinces and territories, car insurance is provided by privately run insurers.

The coverage you get with your car insurance policy isn't a one-size-fits-all deal either. There are several types of coverage to consider, and understanding what’s available can help you make a more informed decision about what coverage to get.

We’ve talked about how you need car insurance on your car to drive legally. But what's the mandatory minimum coverage you need to comply with this requirement?

While auto insurance is needed to drive a car anywhere in Canada, the mandatory coverage required will depend on your province or territory. This means the minimum coverage you need will vary based on where you’re located.

Typically, though, mandatory coverage includes liability coverage, accident benefits, direct compensation for not-at-fault damage, and uninsured automobile coverage. But remember, what’s mandatory will depend on your province. For example, direct compensation for not-at-fault damage isn’t mandatory in Ontario.

Here are the types of mandatory coverage we offer at TD Insurance:

So, you’ve got the basics covered with your mandatory coverage. But what about extra protection that might make a big difference if you get into an accident? Optional coverage can help cover unexpected costs and provide you with extra security on the road. Think of it as customizing your policy to better fit your needs. Here are some popular optional coverage options:

Now that we’ve covered the extras, let’s go back to one important basic coverage for a moment: third party liability insurance. There’s a reason liability car insurance is mandatory across Canada. If you're responsible for an accident that injures someone or damages their property, third party liability insurance financially protects you if you're sued for these damages or injuries. This type of insurance is made up of two key components:

• Bodily injury: This component covers losses or costs (for example, medical bills) for another person’s injuries.
• Property damage: This component covers the cost of repairing or replacing property, like another person’s car.

It’s important to note that each province has its own minimum required limits for liability coverage. However, it’s always a good idea to review the coverage you're getting, since you don’t want to be caught with too little coverage. Having inadequate coverage can leave you facing significant out-of-pocket expenses.

Let’s shift gears from third party liability insurance and take a closer look at comprehensive and collision coverage. Both offer valuable protection, but they each cover different risks.

Comprehensive coverage protects your car from non-collision incidents like theft and vandalism. Collision coverage, on the other hand, kicks in if you’re involved in an accident with another vehicle or with an object like a tree or guardrail.

For private car insurance, most insurance providers offer online quotes and that’s a great first step. With TD Insurance, for example, you can get a quote online in minutes—and conveniently purchase your policy online too. It’s a quick and easy process from beginning to end.

Here’s a step-by-step guide to help you through the process:

1. Get car insurance quotes online or call for a quote. Many insurance providers offer online quotes, making this first step easy. At TD Insurance, for example, you can get a quote online in minutes. 
2. Compare quotes. Once you've obtained a number of auto insurance quotes, don’t just look at price alone. A quote might offer a low price, but when you compare the coverage being offered, it may turn out not to be the best deal for your money. Learn more about why cheap car insurance isn’t always the best option.
3. Purchase online car insurance (or buy your car insurance policy over the phone). Once you’ve compared the quotes and decided on the one that works best for you, you can conveniently make your purchase online. But if you prefer a more personal touch? You can also buy your policy over the phone. At TD Insurance, for example, you can speak with one of our licenced advisors who can help you with your purchase. 

Need more information?  Here’s our introduction to getting car insurance.

If you live in a province with a public or hybrid car insurance system, it’s best to check with the government-owned insurance corporation to get the most accurate information on how to get the right car insurance.

Whether your insurance is provided by a public or private insurer, there are different factors, such as the type of car you drive, your driving record, and the type of coverage you choose, that can affect how much you pay. Check out more detailed information about how car insurance premiums are calculated here.

There are many ways you could save on your car insurance premium. From discounts for safe driving or installing an anti-theft device to savings for bundling your car and home insurance policies, you’ll find lots of opportunities to reduce your premiums.

Lowering your car insurance rates may be easier than you think. At TD Insurance, for example, we offer over 30 ways to save on your home and car insurance premiums), including our Claims-Free Reward, alumni discount, and multi-vehicle discount. Check out more simple tips to help you save on car insurance.

Bundling your car and home insurance is another great way you can save. Bundling not only saves you money, it also simplifies how you manage your insurance, since your policies will all be in one place.

SOURCES:
1. https://www.ibc.ca/insurance-basics/auto/types-of-auto-coverage/mandatory-auto-insurance-requirements