Facility Association: high-risk auto insurance in Canada

As a high-risk driver, you may need to opt for a facility insurance policy while you improve your driving record. So here's everything you need to know about Facility Association in Canada.

What is facility insurance in Canada?

Matt Hands, VP, Insurance and MoneySense

November 22, 2023

If you’re going to drive a car in Canada, you need car insurance. Sometimes drivers are classified as being too high risk for conventional auto insurance. This can be for a number of reasons:

You have no experience driving
Your driving record is poor
You own or drive a vehicle that is deemed high risk
You have an extensive claims history
You use your vehicle in a risky way
Your payment history is problematic
You’ve committed insurance fraud

Because conventional insurance providers may deny coverage, the Facility Association was established. This association ensures that every eligible individual is able to obtain auto insurance and also helps to stabilize the insurance market.

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How does facility car insurance work?

It should be noted that Facility Association uses other insurance providers to implement high-risk policies. While every licensed insurer that operates in a province or territory with facility insurance becomes a member of the association by law, the companies that provide the high-risk car insurance are RSA, Nordic (Intact), The Co-operators, and Novex. These insurers administer the coverage and handle claims adjustments, but the policy is backed by Facility Association.

Where is facility insurance available in Canada?

If you are deemed a high-risk driver, you can obtain facility insurance in the following provinces and territories:

Alberta
New Brunswick
Newfoundland and Labrador
Northwest Territories
Nova Scotia
Nunavut
Ontario
Prince Edward Island
Yukon

In British Columbia, Manitoba and Saskatchewan, the government provides auto insurance and therefore facility insurance is not available. Additionally, Facility Association doesn’t operate in Quebec.

The average cost of facility insurance

If your only option as a driver is to get facility insurance, you can expect to pay 2 to 3 times more for car insurance. The average cost of facility insurance is around $8,000 to $10,000 per year, with costs reaching over $20,000 per year in certain cases.

how rates are calculated

Facility car insurance vs. regular car insurance

If you’re required to get facility insurance, know that you’re still covered to drive on the road under the same terms of your license. That said, there are a couple of key differences between facility insurance and regular auto insurance.

When you buy regular insurance, the market is competitive, so you’re able to shop around for the best car insurance quotes. You find a company with the cheapest price, and usually, that’s the provider you’ll go with. With facility insurance, however, you don’t have that option.

Facility insurance is bought through the “facility association residual market” (FARM). Because it’s a standardized market, there’s no competition, and therefore, you have no options of who to buy your insurance through.

The second key difference is that facility insurance costs a lot more than conventional auto insurance. If you have to buy facility insurance, you can expect to pay two to three times more than a regular policy.

Alternatives to facility auto insurance

If you are a high-risk driver, and you speak with an insurance company, you might be told that your only option is facility insurance. This isn’t necessarily the case – there are insurance providers that will cover high-risk drivers.

Coachman, Echelon, Economical, Jevco and Pafco all provide insurance for high-risk drivers. These five companies typically offer cheaper insurance rates than the Facility Association, so you should speak to an insurance broker about them before purchasing car insurance.

If none of these companies will provide coverage for you, then you may be required to go with facility insurance as your last option.

Do you qualify for regular car insurance?

Facility insurance might not be your only option. By providing us with a few details, we can show you customized car insurance rates from other providers, so you can make sure you're getting the best rate possible.

FAQ: Facility Association in Canada

How do you avoid facility insurance?

The best way to avoid facility auto insurance is to keep a clean driving record. By making sure your driving history is clear of tickets and convictions, you’ll be able to show insurers that you’re at low risk of making potential claims. Also, be sure to pay all your premiums on time – that way, you can avoid policy cancellations and ensure you won’t be denied coverage by regular auto insurance companies in the future.

Is facility insurance my only option?

Because facility insurance is so expensive, it’s often considered a last resort. You may be told by certain insurance providers that your only option is facility insurance, but that could simply mean that they themselves are unable to provide coverage for you. In most instances, you will be able to find a conventional car insurance company that will insure you. Speak to your insurance broker first, and if all else fails, then you may need to seek out a facility policy.

Can you get regular insurance after you’ve had facility insurance?

If you find yourself in a position where the only auto insurance available to you is facility insurance, the good news is that you can get regular insurance again. Assuming you keep a clean driving record, you’ll start to see previous infractions drop off your insurance record. As these disappear, you’ll be able to start acquiring regular insurance again. Most people only end up with a facility insurance policy for about two years.

Can you bundle facility insurance for a discount?

You generally won't be able to bundle auto and home insurance under Facility Association because the organization only provides car insurance to high-risk drivers. If you're looking to purchase coverage for more than one car under facility insurance, however, you can ask your insurance broker about potential multi-vehicle savings. Keep in mind that facility insurance is substantially more expensive than conventional auto insurance, so it should be considered as a last resort.

Matt Hands, Business Director of Insurance

With 6+ years of experience at Ratehub.ca, Matt’s focus has been on growing its newest business unit, Insurance. He is a thought leader and a valuable resource to respected publications across Canada. read full bio

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