Why do you need car insurance?

It’s the law first and foremost. Anyone who wishes to drive a car in Canada must have car insurance. In spite of being legally mandated across Canada, the requirements for a standard car insurance policy vary by province and are heavily influenced by the type of insurance system in place.

In British Columbia, Saskatchewan, and Manitoba, you can buy auto insurance from the government. There are many private insurance companies in Alberta, Ontario, and Atlantic Canada, so comparing car insurance quotes online is an effective way to uncover lower rates. Quebec, on the other hand, offers the cheapest car insurance rates due to its hybrid system. Private insurers cover property damage and the government covers injury.

Each province sets a minimum standard for insurance coverage, but most people purchase a more comprehensive policy. Every province allows you to customize your policy’s coverages and amounts further to suit your needs. 

In addition, auto insurance in Canada has different accident claims systems. Most provinces are moving toward a no-fault insurance system, where you only deal with your insurer when seeking financial compensation for an incident you were involved in. Other systems rely on torts, which are considered inefficient by many, since you have to deal with the other driver and their insurance company to  seek compensation. No matter what the rules are in your province, not having an insurance policy would leave you financially vulnerable.

How does car insurance work in Canada?

Car insurance is required to drive a car in Canada, but not all policies are the same. To ensure you have the right level of auto insurance coverage for all your needs, you can customize your policy beyond the mandatory minimums.

  • Mandatory car insurance
  • Recommended car insurance
  • Popular coverage add-ons

All standard auto insurance policies in Canada include the following coverages. When creating insurance products for Canadian drivers, insurers must adhere to these government-mandated standards. The majority of Canadians customize their car insurance policies beyond the provincial mandatory minimums.

  • Third-party liability insurance protects you financially if you injure someone or damage their car or property. The minimum in most provinces is $200,000, but most people default to $1 million – you can also upgrade to a limit of $2 million.
  • Accident benefits protection provides you and anyone injured with coverage for any medical and rehabilitation costs resulting from an accident. It also pays for loss of income if you can’t work. You can upgrade this coverage for further protection too. 
  • Direct compensation property damage (DCPD) is available in the private insurance provinces. It means you only ever deal with your insurance company for damages.
  • Uninsured auto protects you in the event you’re in an accident where the other driver doesn’t have insurance or flees the scene. Your insurance company can still cover you.

How auto insurance differs from province to province

In spite of the fact that auto insurance is mandatory across the country, there are still differences based on where you live. Each province in Canada offers different types of car insurance coverage, as shown below.

Canadian provincePrivate insurancePublic insuranceMinimum liabilityDirect compensationCollision and comprehensive
British ColumbiaYesYes$200,000NoOptional
AlbertaYesNo$200,000YesOptional
SaskatchewanYesYes$200,000NoRequired
ManitobaYesYes$200,000NoRequired
OntarioYesNo$200,000YesOptional
QuebecYesYes$50,000YesOptional
New BrunswickYesNo$200,000YesOptional
Nova ScotiaYesNo$500,000YesOptional
PEIYesNo$200,000YesOptional
NewfoundlandYesNo$200,000YesOptional

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