In Ontario, every vehicle is required to be protected by an insurance policy. This requirement is enforced with penalties that include fines that start at $5,000 and can total more than $50,000 plus a 25% “victim fine surcharge”. In addition, your driver’s license could be suspended for a year and your vehicle impounded for up to three months if you are caught driving without insurance.
With so much at stake, it’s essential that drivers understand which car insurance is mandatory in Ontario to ensure they are fully protected and don’t run afoul of the law.
Why is car insurance mandatory in Ontario?
Auto insurance has been sold in Ontario for almost 100 years and has been mandatory since 1979. The decision was made because cars had become increasingly powerful and fast over the two decades previous while at the same time court awards for liability lawsuits had been increasing dramatically. People were being hurt in vehicle accidents and some did not have insurance or the financial means to provide restitution to the victims. The government decided to make insurance mandatory to ensure that society would not have to pay for an individual’s lack of responsibility.
The decision to make car insurance mandatory in Ontario was rooted in the common law concept of personal liability. This states that a person is responsible for the damage or harm they cause to someone else. Having to maintain certain insurance to drive a vehicle ensures that those injured in a car accident will have financial support to aid in their recovery and that there is money to pay for any of their property that was damaged in the accident.
Mandatory car insurance has undergone some changes since it was first enacted, but the principles have remained consistent; protect the driver and occupants of the car, protect any third parties who are injured and cover the cost to repair any damage to other’s property that was caused by the accident.
So, which car insurance is mandatory in Ontario?
Mandatory car insurance in Ontario includes the following:
Statutory accident benefits
Statutory accident benefits coverage provides protection if the driver or a passenger of the vehicle is injured. The coverage will pay for medical expenses above what is covered by the provincial health insurance plan (OHIP), rehabilitation services, attendant care, and caregiver expenses. There is also some limited income replacement coverage, should you be unable to work following an accident and non-earners are also considered in the coverage.
It is important to know that it does not matter who is at fault for statutory benefits coverage to kick in. If you are a passenger in someone else’s vehicle, your accident benefits on your own car insurance policy will be the first to payout benefits.
The mandatory limits for statutory accident benefits may not be enough to cover those who experience serious injuries. It’s a good idea to speak to your insurance professional about whether you may need to purchase additional coverage.
There are five main components to accident benefits coverage in Ontario.
Medical, rehab and attendant care costs: This coverage steps in to pay for any additional medical expenses you may have due to your injuries. This can include rehabilitation expenses, massage therapy or assistive devices such as a wheelchair or walker. Your Ontario insurance policy includes $65,000 in coverage for these costs or up to $1 million if you experienced a catastrophic injury. You can buy additional coverage up to $1 million in regular benefits and $2 million for catastrophic injuries.
Caregiver benefits: If the driver or passenger doesn’t have a job and provides full-time support and care for their family, including children, aging relatives or other dependants, and suffers a catastrophic injury, they can receive up to $250 each week for the first dependant and $50 for each additional one. This coverage only responds if they suffer a catastrophic injury, but you can purchase a coverage extension that will cover all types of injuries (regular and catastrophic).
Income replacement coverage: If a driver or passenger is injured and unable to work because of the injury, income replacement coverage will pay 70% of their wages up to $400 per week. This amount will probably not be sufficient for many individuals, but policyholders can purchase increased weekly limits of $600, $800 or $1,000. This coverage only comes into play after any other insurance policies, such as employee benefits are considered.
Housekeeping and home maintenance: If you experience a catastrophic injury because of an auto accident and are unable to perform necessary cleaning and maintenance at your home, you can claim up to $100 each week for these expenses.
Death and funeral benefits: If the driver or a passenger of the vehicle were to succumb to injuries that resulted from a car accident, their spouse will receive $25,000 and each dependant will receive $10,000. The policy will also cover $6,000 for funeral expenses. These limits can be increased to $50,000 for your spouse, $20,000 to each dependent and $8,000 for funeral benefits. In addition, the former spouse of the deceased could receive up to $10,000, if they previously received alimony payments.
Statutory accident benefits play an important role in ensuring that the driver, passengers and dependants have sufficient resources to heal and move on after an accident occurs.
Third-party liability coverage
Third-party liability coverage will pay for claims by other people for injury or property damage that are the result of an accident that was caused by you. In the event that you have an at-fault accident that causes property damage or injuries to third parties, this coverage will step in to pay the cost of defending you in any lawsuit, as well as pay the cost of settling those claims.
The province of Ontario requires you to maintain a minimum of $200,000 in third-party liability, but that limit may not be enough to pay even fairly straightforward liability claims. We suggest that you maintain limits of at least $1,000,000, and seriously consider higher limits of coverage.
Direct compensation – Property damage coverage
While third-party liability coverage will respond and pay for damage to the property of others in an accident caused by you, direct compensation – property damage covers harm to your vehicle or its contents, and for loss of use of your vehicle, if the other driver is at fault for the accident. It’s called direct compensation because the claim is settled and paid by your own insurance company, not the other party’s.
One thing to remember about this coverage is that it only applies if the accident takes place in Ontario, it involves at least one other vehicle, and at least one of the other vehicles is insured in Ontario.
Uninsured auto coverage
Occasionally, Ontarians will be involved in an accident with another vehicle where the driver doesn’t have insurance, or they are the victim of a hit and run driver. Uninsured auto coverage makes sure that drivers, passengers and pedestrians are covered in the event of injury or death. Uninsured auto coverage also covers damage to your vehicle if it is damaged by a known uninsured driver (ie. It was not a hit and run).
As you can see, the mandatory car insurance coverages in Ontario provide protection against many of the things that can happen to a car, its driver and its passengers, but there are several essential coverages that are not mandatory but deserve to be explored. These include:
Collision and upset
While any damage to your car is covered under direct compensation – property damage, if the accident was caused by someone else, the mandatory coverages do not include any damage to your vehicle if the accident is caused by you. Collision and upset steps in to fill this gap. This coverage includes any damage caused to your vehicle by an at-fault accident with one or more vehicles. It also protects you if you were to take the ditch during a storm or hit a tree or almost any other object.
Many of the things that can happen to your car that isn’t covered by direct compensation – property damage or collision are protected when you purchase optional comprehensive coverage. Comprehensive insurance will protect you for losses that occur when your vehicle isn’t moving. This includes protection against vandalism, theft, damage from falling or flying items (which includes badly thrown softballs, poorly piloted drones and unfortunate snowball incidents). It will also cover damage caused by falling ice and hail damage.
When exploring which car insurance is mandatory in Ontario it is clear that a standard auto insurance policy includes many different types of coverage and offers layers of protection for vehicle owners, drivers and passengers.
As with all things related to insurance, auto coverage can be complex and highly nuanced. We strongly suggest that you visit our website or speak to one of our insurance professionals to fully understand what your auto policy should include to protect yourself and your family.