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How car insurance coverage works in Ontario

Car insurance is a requirement for all drivers Canada-wide, but it’s important to note that there are some provincial differences in coverage requirements that you should be aware of. Specifically, for Ontario drivers, auto insurance is provided by private insurance carriers and available coverage is broken down into two categories - mandatory and optional. Third-party liability coverage requires at least a minimum of $200,000, while a driver would have the option to increase their coverage up to $2 million. You are also required to have direct compensation, uninsured motorist, and accident benefits protections. On the other hand, you can opt out of coverages like collision, comprehensive, and various policy endorsements. Be sure to view the table below for more explicit details.

Here is an overview of the available car insurance coverages in Ontario:

Coverage	Description
Public Insurance	Basic auto insurance coverage provided by the Provincial government. This generally includes liability, accident benefits and uninsured motorist coverage. Available: No Required: No
Private Insurance	Auto insurance policies created & sold by private insurance carriers. Though these carriers must still abide by Federal and Provincial regulations. Available: Yes Required: Yes
No-fault insurance	Having no-fault insurance doesn’t mean you can’t be found at fault. This coverage means you must first deal with your own insurance company for all claims, whether you’re at fault or not. But, Ontario will allow a no-fault driver to sue an at-fault driver for additional damages and costs that are not covered by their accident benefits. Available: Yes Required: Yes
Third-party Liability Insurance	Protects against damage caused by you while driving and includes injury and death to others and property damage. This is the only insurance coverage that is mandatory across Canada. Minimum coverage for Ontario is $200,000. Available: Yes Required: Yes
Accident Benefits	Covers your medical benefits if you’re injured in a crash, whether you’re at fault or not. The coverage includes your medical costs, while also paying for additional recovery costs, such as rehab, income replacement, and payment for and attendant care, if needed. Available: Yes Required: Yes
Direct Compensation-Property Damage (DCPD)	Covers damage to your vehicle and its contents, and for the loss of use of your vehicle when damaged – if another person was at fault. This coverage only applies if the crash occurs in a province where DCPD is mandatory, if two or more insured vehicles are involved, and if both insurers are licensed within that DCPD province. Available: Yes Required: Yes
Uninsured Motorist	Uninsured motorist coverage protects against injuries you and your family members sustain in a crash caused by an uninsured motorist. It can also cover your vehicle damages, if the uninsured driver is able to be identified. Available: Yes Required: Yes
Collision Insurance	Protects against damages sustained in a collision. This insurance covers you if your car is damaged in a crash – in both cases whether you crash into another other car or whether you crash into a stationary object. Available: Yes Required: No
Comprehensive Insurance	Protects against any losses a car owner may suffer, from events not related to driving. Such losses could include theft or damage from attempted theft; vandalism; environmental damage to a car from floods, fallen trees, and hail, etc. Available: Yes Required: No
Specified Perils	Covers your financial losses for damage caused specific perils – but only for perils chosen specifically for your policy. Available coverages are for theft; fire; damage from hail, lightning, wind, or flooding; earthquakes; explosions; riots; aircraft crash damage; and damage sustained during any transportation relocation. Available: Yes Required: No
All Perils	This combines the coverages you get with collision and comprehensive insurance. Additionally, all-perils also covers you if an employee, or someone who drives or services your car, steals it. It also covers you if someone you live with steals your vehicle. Available: Yes Required: No
Emergency roadside assistance	This service covers you for roadside callouts for emergencies such as dead batteries, towing, flat tires, keys locked in your car, empty gas tank, etcetera. Many insurance companies offer roadside assistance either included or in addition to other coverages. Available: Yes Required: No

*Table information sourced from http://www.ibc.ca (2017)

Historical Ontario auto insurance rates

Since the start of the year 2000 the Ontario car insurance industry has seen significant change in the average rates they charge to consumers. On average there has been a +52.35% increase in cost of car insurance in Ontario. The last few years have seen the rates level out a bit more, with subtle increases and decreases, but in the early 2000 there were significant price swings on both sides of the equation. Car insurance rate changes are a result of a few factors such as market inflation, insurance fraud and claims volumes. The volatility of the auto insurance market has resulted the residents of Ontario paying the most for their policies.

The historical rate changes shown below are based on all the drivers insured each year by every company in Ontario. The rates are approved and tracked by the Federal Services Commission of Ontario (FSCO). In order for an insurer to be approved for a rate change, as required by law, the proposed rates must be just and reasonable, not excessive, and not going to impair a company’s financial solvency. Insurers will submit their proposed changes to FSCO for approval along with supporting actuarial data.

Average Car Insurance Rate Change By Year

*Information and data sourced from https://www.fsco.gov.on.ca/en/auto/rates/pages/default.aspx (2018)

Factors that impact your Ontario car insurance rates

It pays to shop around to find the cheapest car insurance in Ontario. Even though an insurance application is fairly standard you will find that different insurance companies offer different rates based on their existing users, the number of active claims on their fiscal books, and overall risk tolerance calculations. Furthermore, there are several factors beyond your control that impact a risk tolerance calculation, like Ontario being the most expensive place in Canada for car insurance due to higher than average levels of insurance fraud. Here are seven factors auto insurance companies consider before offering a personalized car insurance rate in Ontario:

Driver demographics

The age and sex of a driver are demographic factors that an insurance company will include in a car insurance risk calculation based on historical data. Statistics show young men under the age of 25 get into more car accidents than their female counterparts, so they have historically paid more for car insurance. Insurance is all about assessing risk based on data, so companies consider a number of general factors, including time spent driving, type of vehicle, number of accidents, and general driving behaviours. Sometimes factors like being married to a partner with a good driving record will actually reduce your rates.

Where you live

In general, people who live in cities pay more due to the increased risk of accidents, vandalism and theft. All in all, if you live close to major roads or any area with a higher population density, you will pay more - it raises the risk. For example, Brampton pays 65% more than the provincial average based on the amount claims are submitted in the area and the high volume of insurance fraud that occurs.

Vehicle type

Your insurer will determine your rate based on the year, make, model, and engine size. In fact, vehicles with high safety ratings often have lower insurance rates, while expensive cars and vehicles that are statistically considered to be a higher theft risks, will generally pay more. Lastly, how much it costs to replace or repair after a crash will also affect your car insurance premium.

Driving history

Not all accidents are treated the same, but an at-fault accident will raise your premium for up to 10 years. Driving convictions, such as speeding tickets, stay on your driving record for three years. Even though one speeding ticket may only increase your rates slightly, repeated offences will have a significant impact on the price you pay. Major automobile crimes resulting in court convictions (e.g. distracted driving) have a significant negative impact on your car insurance premiums and may even result in the cancellation of your policy.

Driving activity

The more you drive, the more you pay for car insurance. The length of your daily commute to work or the amount of distance driven annually will impact your premiums. The more you drive and the longer you driver daily will increase the price you pay for auto insurance. Cutting your mileage by using public transit or biking will help to reduce your car insurance.

Type of insurance coverage

In Ontario, there are a few mandatory coverage types, third-party liability, accident benefits, uninsured driver protection, and direct compensation property damage that are included in every driver’s policy. Optional coverages are available and while they will increase your premiums they could save you a lot of money should the need arise. The most common additional coverage options are: comprehensive, collision, transportation replacement, and the removal of vehicle depreciation.

Applicable discounts

There’s lots of ways to save money on your car insurance in Ontario. Installing winter tires, bundling your auto insurance with your home insurance, and being a member of a union or an alumni organization can save you money. So, make sure to ask your insurance provider for ways to save!

How to get cheap car insurance in Ontario?

Shop and compare

Research which car insurance company provides the best value for you and your vehicle. In Ontario, rates change four times a year, but lucky for you comparing rates with us is free.

Stay with your current insurer

Some auto insurance companies will give loyalty discounts to drivers who remain active with them for years. Especially if they add family members or multiple vehicles to their policy.

Bundle Your Policies

If you use the same insurance company for both your home and auto insurance needs, your insurer will often thank you with a dip in premiums.

Get a multi car discount

If you have multiple drivers and vehicles in the same household, by putting them all on one policy can save you money.

Increase your deductible

Your deductible is the portion you pay when settling a claim before your insurer will pay the rest. If you’re willing to double your deductible, it could save you money.

Ask about discounts

If you’re a member of an Ontario faction of CAA, a large corporation, union, or a school alumnus, it could help you get cheaper car insurance.

Pay premiums annually, instead of monthly

Paying monthly adds administrative costs to your insurer, so if you’re able to pay in full annually you can lower your premiums.

Maintain a good driving record

If you’re a safe driver, obey the rules of the road and drive according to road conditions you can reduce your chances of an accident. Car crashes stay on your insurance record for up to ten years and can result in higher premiums.

Install winter tires

You can save up to 5% simply by adding winter tires to your car. With winter driving conditions being so treacherous throughout Ontario it pays to be safe!

Keep track of your driving

You can even install a telematics device to collect driving data. With user-based insurance (UBI) you can earn discounts based on not driving far or often, and on advanced stats like how carefully you brake and accelerate.

Take a course

If you’re new to driving, a driver’s education course will save money. Your car insurance provider will think of you as a safer driver if you’ve been trained by professionals.

How to get an Ontario driver's licence

In 1994 the Ontario government introduced its graduated licensing system requiring each driver to progress through a 3-step educational program in order to be considered a fully licenced driver. Successfully participating in the graduated licensing system allows you to legally operate a car or motorcycle. Prior to this date a driver only needed to pass a single written and road test in order to become fully licenced. Once you begin this journey you have a 5-year window to earn your G licence and at a minimum it will take you at least 20 months to become fully licenced. Let’s take a quick look at this phased approach:

G1 licence (or level one) eligibility criteria

You need to be at least 16 years of age
Provide proof of legal name, date of birth, and signature. (e.g. Passport, birth certificate)
Pass a vision test
Pass a written test about the rules of the road
Pay the associated written test fees
Can’t consume alcohol and drive
Must be accompanied by an eligible licenced driver

G2 licence (or level two) eligibility criteria

You need to pass your first road test at any DriveTest Centre
You can attempt your first road test after at least 12 months of having you G1 licence or 8 months if you’ve completed a driver’s education course
You must pay an administrative fee
Can’t consume alcohol and drive

G licence (or level three) eligibility criteria

You need to pass a more advanced road test at any DriveTest Centre
Must wait at least 12 months to attempt the road test
There is also another administrative fee to pay

Frequently Asked Questions about Ontario auto insurance

Do I need auto insurance in Ontario?

Yes, it’s the law. There is basic mandatory insurance coverage you need to legally operate a vehicle in Ontario and a slew of additional options to further protect yourself.

Does my insurance cover me if I drive for Uber or Lyft?

It’s important to remember that in Ontario you will always need your own insurance in order to operate legally operate a vehicle. Uber and Lyft offer full coverage via their commercial policies only when you are logged in and actively working as one of their ridesharing drivers. As a best practice we recommend that you contact your car insurance company to inform them of your ridesharing intentions. If you fail to notify your auto insurer you could face repercussions, such as the cancellation of your auto policy.

Why does car insurance in Ontario cost so much?

The amount of insurance fraud and claims settlements being statistically too high are the primary reasons why Ontario’s 9.7 million drivers pay so much for car insurance.

Do I need winter tires in Ontario?

No, you don’t need winter tires on your vehicle, but it can save you up to 5% on insurance. Winter tires are also a great safety measure - they’re softer proving a stronger grip on ice and snow.

Is roadside assistance required in Ontario?

No, but it can save you money on car insurance. It’s also great for peace of mind in case of a battery failure, tire puncture, or you need a tow. CAA, for instance, starts at $70/year and members can save up to 20% (or roughly $280) on car insurance.

How do I report a claim in Ontario?

Call your insurance provider. The number is typically listed on the pink slip and people often keep this slip in their glove box.

How long do driving offences last on my driving record in Ontario?

A moving violation in Ontario will stay on your record for 3 years following a conviction (not the offense date). If you are in an at-fault accident, it will stay on your record for 6 years.

Other helpful Ontario auto insurance resources

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