What is car insurance, how much does it cost, and how can you find the best coverage for your needs? We answer these questions, and more.
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Wondering how to get the best car insurance in Canada? It’s tricky, as auto insurance rules vary from province to province, so that some auto coverages are mandatory and others optional. Add on the many factors influencing the premiums drivers pay, and there is no single best policy for Canadians. That said, you can find the best policy for you. Whether it’s you or a family member getting behind the wheel, this guide will walk you through the most commonly asked questions about car insurance, from what it covers to how to get a competitive rate.
This guide covers all your auto insurance questions:
First, let’s define what it is. Car insurance is a contract between a driver and an auto insurance provider. As with other types of insurance, such as home insurance and life insurance, an auto insurance policyholder agrees to pay a set amount (called a premium) in exchange for the ability to be compensated by the insurer for certain damages or losses covered in their policy. The insurance provider then will cover approved claims that would otherwise be difficult for you to pay for, such as a crash resulting in $1 million in damages to another driver and their vehicle. Some companies allow you to pay your insurance premiums in full for the year, which can save you money compared to paying on a monthly basis.
Many insurance policies include a deductible, which is the portion of a claim paid for by the policyholder. Agreeing to pay a higher deductible can mean having to pay lower premiums on your car insurance policy. (Here’s a breakdown of everything you need to know about your deductible.)
In Canada, auto insurance is legally required for all drivers, regardless of age or experience. People who drive without a valid car insurance can face hefty fines. They also risk losing their savings or other assets if they are involved in (let alone at fault for) an accident and are forced to pay for the damages out of pocket.
By law, every province and territory requires drivers to carry some form of auto insurance. But the types and minimum amounts of mandatory coverage (and the general cost of auto insurance) vary, depending on where you live.
A car insurance policy can offer coverage for many different types of claims. These include instances in which you have caused damage to another person’s property or injured yourself, other drivers, passengers or pedestrians.
In Canada, some auto insurance coverages are mandatory, while others are optional. Since auto insurance is regulated by the provinces and territories, you should always confirm what is legally required in your area. But, with few exceptions, all auto insurance policies must contain the following coverages:
The mandatory components of your auto insurance policy work together to offer financial protection against some of the most common and the most expensive claims.
However, these don’t cover damages to your own vehicle. For that, you will need to purchase optional coverages. The following two types of coverage are recommended as endorsements. In Saskatchewan and Manitoba, they are both mandatory.
What are the best car insurance coverage amounts? The answer to this question will vary from one person to the next, as it ultimately depends on your ability or willingness to cover damages out of pocket, should you get into an accident.
For example, uninsured auto insurance typically provides up to $200,000 in property damage and injury coverage. However, in some provinces, you can increase this amount. However, since a single accident can easily exceed the minimum coverage, many drivers choose to pay for $1 million to $5 million in coverage. Car insurance coverage amounts aren’t entirely up to you, though. Depending on where you live, you will have to have a minimum amount of coverage.
For example, in most Canadian provinces, you are required to have $200,000 in third-party liability coverage. (In Quebec, the minimum is $50,000, and in Nova Scotia, it is $500,000). Remember: As the driver, you are responsible for paying for any damages that go beyond what is included in your policy.
Receiving more coverage means you will have to pay more in premiums.
The amount you will pay in auto insurance premiums is based on a host of factors. Here’s a sample of some of the most important ones:
While an insurance broker can give you more accurate numbers for you and your particular driving situation, the General Insurance Statistical Agency has looked at the average premiums across 10 provinces. On average, Canadian drivers spend $1,142 per year on car insurance. Drivers pay the most in British Columbia (where the average cost is $1,832 per year) and the least in Quebec ($717 per year). Here’s what you may expect to pay, based on the province you live in:
| Province | Average of cost of car insurance |
|---|---|
| Alberta | $1,316 |
| British Columbia | $1,832 |
| Manitoba | $1,080 |
| New Brunswick | $867 |
| Newfoundland and Labrador | $1,168 |
| Nova Scotia | $891 |
| Ontario | $1,505 |
| Prince Edward Island | $816 |
| Quebec | $717 |
| Saskatchewan | $1,235 |
Given the complexity of auto insurance and the number of variables that determine what you will pay in premiums—including where you live, the amount of coverage you need and your driving record—there isn’t a straightforward answer to your question, “Which company has the best car insurance in Canada?”
However, there are a few steps any driver can take to feel confident that they’re getting the right amount of coverage at a competitive rate.
First, start by understanding the different components of an auto insurance policy. This guide should hopefully be a useful starting point. You may also want to consult the Insurance Bureau of Canada (IBC) for general information on the car insurance rules specific to your province.
Then, shop around for the best car insurance rates. You can start by getting a quote from your bank, an insurance broker or where you get your home or life insurance; however, you should also compare rates online before you buy auto insurance.
Compare the various products and premiums available until you feel confident about your choice. One way to do this is to use an online aggregator site, which pulls rates from various providers—similar to working with an insurance broker. (Note: MoneySense.ca is owned by Ratehub Inc., which also owns the aggregator site Ratehub.ca.)
In order to obtain a car insurance quote, you’ll be asked to provide information about a few things, including the vehicle requiring coverage, the drivers you want to insure and the amount of insurance coverage you want. You’ll have to share valid driver’s license information and the details of your existing insurance provider and policy (if you have one). You may also be asked to provide information about previous traffic violations and insurance claims, if you have any.
The insurance provider will then give you a quote for the policy. You may be tempted to run with the company offering you the cheapest auto insurance quote, but you should always carefully compare multiple rates and policy details before making a final decision.
To make a fair assessment, you’ll want to look at:
Private insurers may be reluctant to offer insurance to high-risk drivers, such as those that have been convicted of impaired driving. However, since auto insurance is mandatory in Canada, all licenced drivers are guaranteed coverage no matter where they live.
It may not be easy to find affordable car insurance after a DUI, but you will find coverage. Quebec, Manitoba, Saskatchewan and British Columbia have government-run insurance plans that include options for high-risk drivers. In other provinces with private insurers, high-risk drivers can work with the Facility Association, a non-profit organization that ensures the availability of car insurance to all eligible drivers, to obtain coverage.
No matter how you look at it, auto insurance is a significant expense. And given that it’s a legal requirement, it’s an unavoidable cost of owning and driving a car in Canada. Still, the price of car insurance pales in comparison to what a driver faces without it: significant fines, or getting into an accident without being able to pay for the associated medical bills or repairs. To get the most value out of car insurance, understand the coverages you need—and those you don’t, or need less of—and always do your research before buying an auto insurance policy.
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I recently realized that damages caused by other drivers to vehicles, (example I got rear ended recently and suffered minor damage to my 2016 gmc pick up truck.) reduce the resale value on my vehicle even though repairs were done by General Motors to perfection. What’s up with that! Why should I suffer a loss on my vehicle upon resale? It’s only fair insurance companies reimbursed non-fault party For the losses incurred!