What Car Insurance Do I Need

What car insurance do I need?

Every place in Canada has its own rules about what kind of car insurance you need, which can be confusing. Whether you’re new to driving, just moved to Canada, or are considering changing your insurance, it’s important to know what kind of insurance you must have.

Across Canada, mandatory insurance coverages vary based on province or territory, but basic mandatory coverage that spans across Canada includes at least liability coverage and a form of accident benefits coverage.

In this comprehensive guide on car insurance in Canada, we’ll look at every driver’s basic insurance needs by province, discuss extra options for more safety, and advise on picking the best insurance for your situation and wallet.

Mandatory coverage types in Canada

Understanding mandatory coverage types can help you see why they’re required and how they protect you when you’re driving. While the requirements vary by province and territory, here are the various coverage types that are required throughout Canada in a basic car insurance policy.

Third-party liability coverage

This type of insurance helps pay for any damage or injuries you accidentally cause to other people or their property while you’re driving. Say you accidentally hit someone’s fence or another car; third-party liability coverage will help pay for their repairs or medical bills. Most provinces require at least $200,000 of this coverage, but many people choose to get more because the costs of accidents can quickly add up.

Accident benefits coverage

Accident benefits coverage is there to help take care of you and your passengers if you get hurt in a car accident, no matter who caused it. This includes paying for medical bills, like doctor visits or physiotherapy, and can also provide money if you can’t work because of your injuries. It can even offer support for other needs while you’re recovering, such as help around the house if your injuries prevent you from doing your usual tasks.

Uninsured/underinsured motorist coverage

Unfortunately, not everyone on the road has insurance, and some drivers might not have enough to cover the damages if they cause an accident. Uninsured/underinsured motorist coverage is your backup plan in these situations. It steps in to cover the costs for injuries or damages to you and your car that the other person’s insurance should have covered. This way, you’re not left paying out of pocket for someone else’s mistake.

Direct compensation-property damage coverage

This coverage is a bit different because it deals directly with damage to your car when you’re not at fault in an accident. Instead of dealing with the other driver’s insurance company to get your car repaired, your own insurance company handles it. The “direct compensation” part means that you deal directly with your insurer, which can make the process smoother and quicker. You get compensated for the damages to your vehicle based on the percentage of fault assigned to each driver in the accident, but only if the accident happened in your home province and involves another insured driver.

Mandatory insurance coverage by province

In Canada, the mandatory car insurance coverage varies by province and territory. Here’s a general overview of what’s required across the country:

Alberta

In Alberta, drivers need three main types of insurance. The first one is third-party liability coverage. This means if you accidentally hurt someone or damage their stuff while driving, your insurance will help pay for it. You need at least $200,000 of this insurance, but many people get more just to be extra safe.

The second type is accident benefits coverage. This helps you out if you get hurt in a car accident. It doesn’t matter who caused the accident; this insurance can help pay for your doctor’s visits and can even give you some money if you can’t work because you’re injured.

The third type is direct compensation-property damage, which allows you to work with your own insurance company if you’re not at fault to cover repairs to your vehicle when in an accident.

British Columbia (BC)

In BC, drivers need to purchase basic-level car insurance through ICBC. This includes three types. First is third-party liability coverage, with a minimum of $200,000, but more is recommended because accidents can be costly. This insurance pays for any harm or damage you cause to others.

Next, there’s accident benefits coverage, which helps with your medical and recovery costs if you’re injured and also offers support if there’s a death due to the accident.

The third must-have is underinsured motorist protection, covering up to $1 million. This kicks in if the person at fault doesn’t have enough insurance to cover the damages.

Any additional coverage can be purchased through ICBC or an alternate provider.

Manitoba

Motorists in Manitoba must purchase government-regulated Autopac car insurance at the basic level through MPI. They need third-party liability insurance, which requires at least $200,000 in coverage, to help pay for any damage or injuries you might cause to others or their belongings while driving.

Next, they need personal injury protection. This insurance is there to help you out if you get hurt in a car accident. It can help cover your medical bills and even give you some money if you can’t work because you’re injured.

Any additional coverage is purchased through private insurers or brokers.

New Brunswick

In New Brunswick, drivers must have third-party liability insurance with at least $200,000 coverage to cover any harm or damage they might cause to other people or their stuff in a crash.

Then, you need direct compensation, which means if you’re in an accident and it’s not your fault, your insurance will cover the repairs to your car without you having to deal with the other driver’s insurance.

Lastly, accident benefits are required, too, to help cover medical bills and time off from work if you can’t work because of injuries from a car accident.

Newfoundland and Labrador

In Newfoundland and Labrador, drivers must have third-party liability insurance; you need at least $200,000 to help pay for any injuries or damage to someone else’s property if you’re at fault in an accident.

Then, you need uninsured automobile coverage to protect you if an uninsured driver hits you or if you’re involved in a hit-and-run incident.

Lastly, you also need accident benefits to help with your medical costs and possibly provide some income if you’re hurt in an accident and can’t work for a while.

Northwest Territories

In the Northwest Territories, drivers must ensure they have $200,000 in third-party liability insurance. You must also have accident benefits to pay for your medical bills and any help you might need to get better if you’re injured in a car accident.

Nova Scotia

In Nova Scotia, drivers need third-party liability insurance with at least $500,000 coverage, which pays for damage or injuries you cause to others. Next, accident benefits cover your medical expenses and lost income if you’re injured. Lastly, uninsured and underinsured motorist coverage protects you if the other driver doesn’t have enough or any insurance.

Nunavut

In Nunavut, drivers need two important insurance types: third-party liability, with a minimum of $200,000 coverage, for damages or injuries you cause to others, and accident benefits, which cover your medical costs and lost income if you’re injured in an accident.

Ontario

In Ontario, drivers must have four main types of car insurance. First, there’s third-party liability insurance with a minimum of $200,000 coverage, which helps pay if you hurt someone or damage their property.

Then, there are statutory accident benefits. This package can help replace your income if you can’t work due to an accident, among other benefits.

Next, direct compensation-property damage allows you to work with your own insurance company to cover repairs to your vehicle if you’re in an accident and you’re not at fault.

Lastly, uninsured automobile coverage protects you if an uninsured driver hits you or if you’re involved in a hit-and-run and the driver cannot be later identified.

Prince Edward Island

In Prince Edward Island, drivers need third-party liability with a minimum coverage of $200,000 for damages or injuries you cause. Then, accident benefits to cover any medical and rehabilitation costs and provide support in case of death from an accident. Lastly, uninsured automobile coverage to protect you if you’re in an accident with a driver who doesn’t have insurance.

Quebec

In Quebec, drivers are part of a public auto insurance plan that covers any personal injuries if they’re in a car accident. But, if your car gets damaged, you need a private insurance plan for that. Also, you must have third-party liability insurance with at least $50,000 coverage from the Société de l’assurance Automobile du Québec (SAAQ).

Saskatchewan

In Saskatchewan, drivers have a choice for mandatory personal auto injury insurance. The default is no-fault, where you’re covered regardless of who’s to blame, or they can select tort, where you can sue if the other driver is at fault. Plus, you must have third-party liability insurance. Basic coverage of $200,000 liability is automatically provided for every driver/vehicle registered in Saskatchewan by the Saskatchewan Auto Fund.

Additional coverage can be purchased from Saskatchewan Auto Fund or through alternate brokers or insurers.

Yukon

In the Yukon, drivers must have third-party liability insurance with a minimum coverage of $200,000 for any harm they might cause to others. You also need accident benefits to help with medical bills and lost income if you’re injured in a crash.

Additional auto insurance coverage types

In Canada, you can add extra insurance options to your basic car insurance to give you more comprehensive protection. Here are some of the additional types you might consider:

Collision coverage

Imagine you’re driving and suddenly hit another car or a stationary object. Optional collision coverage takes care of the repair costs for your car, regardless of who was at fault. This can be a lifesaver, especially if your car is new or expensive to fix.

Comprehensive coverage

This coverage is for almost everything else that can happen to your car that isn’t a collision. If your car gets stolen, vandalized, or damaged by severe weather (like hail), comprehensive coverage has you covered. It’s great for peace of mind, knowing that many unexpected events won’t leave you footing a huge bill.

Specified perils

If you’re worried about specific risks, like floods, fires, or theft, you can get coverage just for those. It’s a way to customize your insurance based on what you think is most likely to happen, potentially saving you money on premiums compared to more extensive coverage.

All perils

This is the most comprehensive option, combining collision and comprehensive coverages. It’s essentially a worry-free choice because it covers a wide range of potential damages, except for a few exclusions listed in your policy. If you want maximum protection, this is the way to go.

Loss of use

After an accident, you might be without a car for a while. Loss of use coverage pays for your transportation costs, like renting a car or taking taxis, while your vehicle is being repaired. It’s a convenient option that can save you from the hassle and expense of being without a vehicle.

How much car insurance coverage do you need?

In Canada, the amount of car insurance you need starts with meeting the minimum legal requirements set by your province or territory. This usually includes liability coverage to pay for damages you cause to others and a form of accident benefits to cover medical costs and lost income if you’re injured.

However, the right amount for you also depends on your car’s value, how much you drive, and your financial situation. If you have a new or expensive car, you might want more coverage, like collision and comprehensive, to protect against damage or theft.

It’s all about balancing what you can afford to pay for insurance and what you’re willing to pay out of pocket if something happens.

How to choose the right coverage for you

Picking the right car insurance means considering a few important things to make sure you’re covered without paying too much:

• Know what insurance you must have by law for your province or territory.
• Consider your vehicle’s worth. If your car is new or expensive, you might want full coverage. For older cars, basic coverage might be enough.
• Look at your budget and choose a deductible (the amount you pay in an accident before insurance pays) that you can afford, but remember it affects your monthly insurance cost.
• Consider how much time you spend driving. You might want more insurance if you drive often or live in a place with known car thefts or bad weather.
• Learn about extra coverage options. Some extra coverage can be really helpful, like accident forgiveness, which can help prevent your insurance from going up after your first at-fault accident.
• Shop around and get price quotes from various local insurance companies to find the best deal.
• Make sure you know exactly what your insurance will cover and how to make a claim.