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Introduction to Canadian car insurance
Matt Hands, Business Director, Insurance
Car insurance in Canada is a requirement for anyone who wishes to drive a car. In each province, car insurance policy requirements vary depending on whether it's a public or private insurance system.
British Columbia, Saskatchewan, and Manitoba are public insurance systems where you buy car insurance from the government.
Alberta, Ontario, and Atlantic Canada use private insurance companies vying for your business which is why comparing car insurance quotes online is an effective strategy for lower rates. Quebec is a hybrid system (and the cheapest car insurance province) where you buy injury coverage from the government and property damage from your insurer.
Every province mandates coverage requirements, some more than others. You can also further customize your policy to your personal needs.
Required car insurance coverage
- Third-party liability insurance protects yourself financially if you injure someone or damage their car or property. The minimum is $200,000, but most people default to $1 million, and you can upgrade to $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, 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 is for when you're in an accident where the other driver doesn't have insurance, your insurance company will still cover you.
The majority of Canadians customize their policy beyond the provincial mandatory minimum car insurance coverage requirements.
Car insurance policy add-ons
- Collision insurance is for when you're at fault in an accident and pays to repair or replace your vehicle's damages.
- Comprehensive insurance is insurance against damage while your car is parked. Think of vandalism, burglary, flood, fire, or a tree falling on top of it.
- Specific Perils is when you want insurance for a specific risk (i.e. peril) such as lightning or flood, but don't want to pay for all the risks under comprehensive.
- All perils combines collision and comprehensive but also gives you coverage against theft by someone you know like your mechanic or a family member.
Car insurance endorsements
Each province has endorsements available through the government and activated by your insurance provider. In Ontario, they are Ontario Policy Change Forms (OPCF), in Quebec they are Quebec Endorsement Forms, and in Alberta and Atlantic Canada they are Standard endorsement forms (SEF). Here are some popular car insurance endorsements.
- Suspension of coverage (SEF/QEF/OPCF16): Don't need to drive for a bit? Looking to cut back on expenses. You can put your car insurance on hold with this endorsement.
- Loss of use coverage (SEF/QEF/OPCF20): After any insurance claim that puts your car in the repair shop, this endorsement pays for a rental car so you can still drive around.
- Coverage for damage to non-owned automobile(s) (SEF/QEF/OPCF27): Many people consider this rental car insurance because it extends your existing insurance to a non-owned car, like a rental vehicle or a friends' car.
- Accident forgiveness or Accident Protection (SEF/QEF/OPCF39): Protects your driving record or abstract from your first at-fault accident that would otherwise increase your rates.
- Remove depreciation deduction (SEF/QEF/OPCF43): A car depreciates in value the moment you drive it off the lot. If your car is a total write-off, your insurance company will pay the actual cash value which will be less than buying it brand new. This endorsement covers that gap.
Before finalizing your policy, make sure to review all coverage options available to you within your province. After comparing quotes online, we'll connect you with a car insurance broker who can finalize the details of your policy and go over any questions you may have.
Review your car insurance every year
Car insurance companies change prices all the time. Set an annual reminder to compare car insurance before you renew to ensure the best price.
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Factors that impact your car insurance rates
You might think that car insurance quotes for the same driver or car would be similar across all providers. However, every auto insurance company has its own costs to cover, based on data from their existing customers and claims.
An insurance rate calculation has many subtle complexities, and multiple factors contribute to your final rate. Based on the information you provide in your driving profile, a car insurance company will categorize your risk potential and calculate a personalized rate.
Unfortunately, some factors are out of your control, but there are still a few for which you are 100% in the driver’s seat. Therefore, being in the know could save you money on your auto insurance policy. Here are seven factors that auto insurance companies will consider before offering you a personal car insurance quote.
Driver demographics
Where you live
Vehicle type
Driving history
Driving activity
Type of insurance coverage
Applicable discounts
Factors companies can't use in your car insurance quote calculation
Employment history, bankruptcy, your housing situation, or your net worth are not factors. Neither is your credit score, depending on your province. And the car colour? That's a myth.
How car insurance coverage works (by province)
Auto insurance is mandatory in every province and territory. However, there are differences depending on where you live, and car insurance rates vary wildly as a result.
Throughout most of Canada, you buy car insurance through the private market, but in BC, Manitoba, and Saskatchewan, public insurance is available through the Provincial government. Quebec has its own unique regulations where the public entity covers injury or death, and private insurance covers property damage.
Most provinces operate under a no-fault insurance system. No-fault means you only ever deal with your own insurance company, not that you can't be found at fault. British Columbia will adapt to no-fault in May of 2021, Alberta is currently debating its merits. In Saskatchewan, the default is no-fault, but you can opt for tort coverage which allows a driver to sue for damages.
Below, we break down all the mandatory coverages and available optional car insurance coverage for your consideration.
Mandatory car insurance coverage
Third-party liability
Accident benefits
Uninsured auto
Direct compensation property damage (select provinces)
Optional auto insurance coverage
Collison
Comprehensive
All perils
Specified perils
Endorsements
Emergency roadside assistance
How much is car insurance across Canada?
Table
Average annual insurance rates in Canada
| Province | Average annual insurance premium |
|---|---|
| British Columbia | $1,832 |
| Ontario | $1,528 |
| Alberta | $1,528 |
| Saskatchewan | $1,235 |
| Newfoundland | $1,168 |
| Manitoba | $1,140 |
| Nova Scotia | $891 |
| New Brunswick | $867 |
| Prince Edward Island | $816 |
| Quebec | $717 |
Below is the chart for the average car insurance cost in Canada. Your car insurance rate will vary depending on the multitude of factors, but at least this gives you an average and what you can expect to pay.
*source: Insurance Bureau of Canada - They calculate the average premium in each province by adding up the total premiums and dividing them by the number of personal vehicles per province.
Are you getting the best price for your auto insurance?
How to get cheap car insurance quotes
Shop around and compare
Auto insurance rates vary greatly between companies – you need to research which insurer will offer the best coverage specific to you.
Bundle policies
You may get discounts if you bundle insurance plans together, for example, by having your auto and home insurance bundled together with the same auto insurance carrier.
Increase your deductible
The deductible is what you pay when something happens to your car, before the insurance company pays the rest. Increasing your deductible can lower your annual premiums.
Ask about discounts
Many insurers offer discounts to members of professional organizations or affiliation groups – so it pays to ask about discount relationships.
Pay premiums annually, instead of monthly
If you pay your premiums up front for the year – or even per half-year – you will usually end up paying less than if you paid monthly.
Maintain a good driving record
At-fault collisions and driving convictions stay on your insurance record for years and make your rates go way up – if you drive safely, sensibly, and obey the road rules over a long period, you’ll pay the lowest rates.
Track your driving
With usage-based insurance (UBI) you can earn discounts for driving well. Tracking your own driving online, you can earn discounts by not driving far or often, and on advanced stats like how carefully you brake and accelerate.
Take a course
Accredited driving courses will not only make you a safer driver, but can also result in discounts from many insurance companies.
FAQ
Frequently asked questions about car insurance quotes
Why are my car insurance quotes so high?
How do I find the cheapest auto insurance rates?
Is auto insurance different between provinces?
What do I need to get car insurance in Canada?
Who has the cheapest car insurance?
Is car insurance in Canada mandatory?
Author Bio
Matt Hands, Business Director of Insurance
Matt started his professional career at CARPROOF where he honed his marketing and analytical skills for over 3 years. Matt then took his wealth of experience to Ratehub.ca’s Toronto offices, working with insurance providers, agents, and brokers to grow and expand the Insurance business unit. He is a thought leader in the community and a valuable insurance resource to respected publications like the Globe & Mail, Toronto Star, Huffington Post, Yahoo News, and 680 news radio in Toronto.
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