How Car Insurance in Canada Works

Why you need car insurance in Canada?

You must have car insurance in Canada if you own a car or other vehicle. It is a necessity if you own a car in Canada.

Car insurance may protect you from:

  • having to pay to repair your car or other vehicle if it’s damaged or in an accident
  • liability claims if you’re held responsible for an accident causing damage to another person’s vehicle or injury to other people​

Insurance companies may refer to car insurance as property and casualty insurance. Property and casualty insurance also includes home insurance, business insurance and disaster insurance.

Who a car insurance in Canada policy covers

If you get into a car crash, your insurance may cover:

  • ​the driver
  • all passengers
  • other people who are involved

In some provinces, injured passengers or other people involved in the accident who have their own insurance policy must make a claim under their policy first.

The principal driver is the person who drives the car most often.

Additional drivers are other drivers in the household who may use the car as part of their routine, such as driving to school or work. Your insurance policy must list additional drivers. If additional drivers have a poor driving record, your premiums may increase.

Occasional drivers are drivers who only use the car from time to time.

What a car insurance in Canada policy covers

Coverage is the maximum amount of money the insurance company will pay you if you make a claim for a loss or an event covered by your policy.

Mandatory insurance coverage

Canadian provinces and territories require drivers to have mandatory coverage. Some provinces may require more coverage than others.

Liability insurance

Liability insurance covers losses, such as injury or death, which your vehicle causes to other people. It also covers damage your vehicle causes to other vehicles. If the cost of the losses or damage is more than your liability limit, you’ll need to pay the balance of the settlement yourself.

Liability insurance does not cover the cost of repairs to your own vehicle. You may need to consider additional insurance to cover these costs.

Accident benefits/bodily injury insurance

car insurance in canada

Accident benefits cover the cost of your own medical expenses and loss of income when you’re in a car accident.

In Quebec, you’re automatically enrolled for insurance that covers bodily injury. Premiums are paid as part of your driver’s licence registration. You don’t need to buy extra coverage for this.

Additional insurance coverage

Your car insurance policy may also provide you with additional benefits.

Collision insurance

Collision insurance covers the cost of repairing or replacing your car if you hit another car or object. This is sometimes included with your mandatory insurance coverage.

Ask your insurance company what coverage your policy provides.

Comprehensive car insurance in Canada

Comprehensive car insurance covers the cost of repairing or replacing your car due to other types of damage or loss. This may include:

  • vandalism
  • damage to your windshield
  • theft

Comprehensive car insurance doesn’t cover loss or damage to your car if you hit another car or object in a collision.

[wpcode id=”82″]