Personal auto insurance
Personal auto or car insurance for private-passenger vehicles is mandatory to drive in every province in Canada legally. There are compulsory minimum coverages you must carry as required by the region in which you live. In addition, you can select optional coverages to add to your policy to ensure you have maximum protection.
What is car insurance?
Whether you call it car insurance, auto insurance, or vehicle insurance, it is an insurance policy for a broad range of personal vehicles, including cars, vans, SUVs, pickup trucks, motorcycles, and other road vehicles.
Car insurance provides you with financial protection against physical damage or bodily injury resulting from an accident or collision, as well as the liability you face that may arise from incidents that occur driving a vehicle whether you own it or not.
It protects you from having to pay to repair your vehicle or another driver’s vehicle if it’s damaged in an accident. It also covers you if you’re responsible for a collision that causes damage to another person’s vehicle, property, or if the incident injures them.
What does it cover?
Depending on which province you live in, you must have various types of mandatory car insurance coverages and coverage limits. The most common types of mandatory coverages a car insurance policy includes are:
- Third-party liability. Third-party liability protects you financially if you are in an accident, hurt someone else, and are deemed at fault for the collision. You may be legally liable for injuring or killing someone or causing damage to another person’s property or vehicle. It will also cover your legal expenses if you are sued by one of your passengers or another driver involved in an accident while you were driving.
- Bodily injury coverage helps pay for the cost of medical expenses of other people injured in an accident, including the cost of their lost wages if their injuries are severe and they cannot return to work.
- Property damage coverage provides financial support for the damages you cause with your vehicle to someone else’s property, including vehicles, homes, and more.
- Accident benefits. Accident benefits cover the cost of injuries to you or any passengers in your vehicle if injured in a collision, regardless of who’s responsible for the accident. It replaces lost income, pays for medical or other expenses, and may provide a death benefit to loved ones if the unexpected happens.
- Uninsured auto or motorist. If you or your family are hurt or killed in a car accident by another driver who is not insured, uninsured auto coverage helps pay for damages to your vehicle. It also covers your medical expenses, lost income, and other expenses incurred by an accident. Some provinces do not require you to carry uninsured auto coverage, including B.C., New Brunswick, Newfoundland and Labrador, and Prince Edward Island.
- Direct compensation-property damage (DC-PD). DC-PD refers to how your claims are paid out. For example, in Ontario, you are paid directly by your insurer, as DC-PD is part of that province’s no-fault insurance system. Not all provinces operate in the same way. Nevertheless, this type of coverage helps repair or replace your vehicle (and its attached contents, such as your vehicle’s infotainment system) if you’re in an accident for which you are not at fault. The purpose of DC-PD coverage is to ensure your accident claim is processed quickly by your insurance provider instead of having to wait for another driver’s insurer to complete its assessment of a crash.
Optional coverages you can add to your policy include:
- Collision or upset coverage. Collision or upset coverage is an optional type of insurance you can add to your overall policy. It covers the cost to repair or replace your vehicle if you are involved in an accident for which you are at fault. If you don’t have collision coverage and are deemed responsible for an accident, you are on your own to pay for the damages to your vehicle. Collision coverage is not mandatory in Canada. However, it is highly recommended you include it in your policy, especially if you frequently drive, commute to work, or drive on major highways.
- Comprehensive coverage. Often referred to as “other than collision” insurance, comprehensive coverage, or all-perils coverage, protects your vehicle from the cost of damages that result from severe weather, fire, glass and windshield damage, fallen objects such as a tree branch, vandalism, or theft. Usually, the limit of your comprehensive coverage is tied to the actual cash value of your car, which insurers calculate based on the vehicle’s age, mileage, resale value, and condition prior to an incident that damages it.
How much does car insurance cost?
The cost of an annual car insurance policy in Canada varies by the insurance company and is determined by the car insurance regulator in your province. Some provinces feature public auto insurance regimes, such as B.C., Manitoba, and Saskatchewan. Other provinces feature private auto insurance, such as Ontario, Alberta, and Nova Scotia.
Among the factors insurers consider when determining what your rate includes:
- Your age and gender
- Your marital status (if you’re under the age of 25)
- Your credit score (not applicable in some provinces)
- Where you reside
- Your driving experience and driving record
- The type of vehicle you drive
- How many kilometres you drive annually
- Your car insurance history
Common claims scenarios
Frequently asked questions