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Types of car insurance in Canada

Types of car insurance in Canada
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If you’re of driving age or looking to buy a new car, you also need to think about your car insurance cover. While taking out a car insurance policy may not be the most exciting task, it’s absolutely essential that you get one before you drive your car. Unlike many types of insurance, which are optional, car insurance is a mandatory policy in Canada. If you’re not sure what type of car insurance to choose, read on for full details on car insurance in Canada.

What is car insurance?

The purpose of car insurance is to provide financial protection to drivers in the event of bodily injury or damage to the vehicle resulting from collisions or accidents such as fire or theft. As with all other insurance policies, policyholders will pay a premium (usually monthly) to protect themselves against any financial loss due to these accidents.

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Do you need car insurance? Why is it important?

Whether you drive a car, truck or motorcycle, you need car insurance if you live in Canada. If you drive and don’t have car insurance, you could be fined or even have your license suspended.

That said, there are several types of car insurance, and not all of them are mandatory. The mandory car insurance insurance depends on the province in which you live. Before taking out a policy, talk to an insurance agent or broker like YouSet to fully understand the insurance coverage required for your needs.

The different types of car insurance in Canada

As mentioned earlier, there are several types of car insurance in Canada. Some are mandatory, such as liability insurance, while others are optional, such as collision coverage. Here’s more information on each type of car insurance

Types of mandatory car insurance

Liability Insurance

Liability insurance is the most basic type of automobile insurance. Its purpose is to financially cover the insured against any damage he causes to another car or to the driver of that car. Liability car insurance pays for repairs to the other car and medical bills following an accident you’ve caused. You can choose the amount of insurance coverage, from the minimum (which varies by province) to a few million. Policyholders often choose between one and two million.

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Types of optional car insurance

While liability insurance is the mandatory component of car insurance in Canada, there are several additional coverage options available to drivers.

Here, we focus only on the main coverage options, but there are also a wide variety of optional insurances (replacement value, roadside assistance and car rentals, etc.) that we explain in our complete guide to car insurance.

Collision and Upset Coverage

In addition to liability insurance, this insurance covers you against the risk of collision or upset. For example, a collision with a person, an upset or a hit-and-run. Collision coverage usually costs a little more because you are covered more, but it also usually requires a fixed deductible at the time of loss. What’s more, this car insurance cover may be mandatory if your car is financed (car loan).

Comprehensive excluding collision or upset

This protection covers damage without collision or upset, ranging from theft, vandalism, fire, windshield replacement to weather-related damage. Check the special clauses, conditions and exclusions in your car insurance contract.

All-risk coverage

All-risk coverage offers you the greatest protection of all policy types. In fact, it combines protection against the risks of collision or upset with the risks of damage without collision, such as fire, theft, vandalism, windshield replacement and weather damage. In addition to liability insurance, of course.

All-risk coverage is certainly more expensive than other policies, because as the name suggests, it covers all damage. But this is generally the most popular option. Like other types of car insurance, comprehensive coverage requires you to pay a deductible at the time of claim. The lower the deductible you agree to, the higher your insurance premium.

How to find cheap car insurance?

Looking for car insurance is pretty straightforward. That said, do you know what type of car insurance you should choose? What about the deductible?

Understanding the need for car insurance

First, you need to understand your insurance needs. For example, if you have a 15-year-old used car worth $1,000, collision coverage probably isn’t worth it for you. Why? Because the amount of the insurance premium (over several years) and the deductible to be paid (in the event of accidents) can be worth more than the price of your car… It’s case by case.

Conversely, if you buy a new car with financing (car loan), you have no choice but to opt for collision or upset coverage (which is not mandatory for a car without a car loan). You should also consider comprehensive insurance and additional options such as replacement value.

Determine the type of deductible for your car insurance

In the event of a claim, your insurance deductible is the amount you have to pay out of pocket before your insurance company pays. The amount of deductible to choose depends on your needs, your driving record (if you’re more at risk of claims), and so on. But be aware that you could save a lot of money on your monthly premiums if you choose a higher deductible.

Take a look at your current car insurance contract

Take a look at your current car insurance contract to understand your insurance coverage. You’ll see your type of car insurance, your additional insurances (if any), your monthly premium, your deductible, and so on. If you have any questions, please do not hesitate to contact your insurance company.

Compare car insurance online

To get the best price, you can contact an insurance broker like YouSet. They have access to different insurance companies and can find the best insurance for your needs.

Alternatively, another interesting option is to use a car insurance comparator. In just a few clicks, you’ll be able to get car insurance quotes from several insurance companies.

Finally, note that your car insurance premium will vary according to several factors (your car, where you live, your driving history, etc.), in addition to the type of insurance and deductible you choose.

Bottom Line

In short, car insurance is a mandatory insurance policy in Canada. However, there are several types of car insurance, and not all of them are mandatory. Not to mention the differences in the law from a province to another. So you need to choose your car insurance and optional coverages according to your needs, but also according to your province of residence.

To compare car insurance quotes online, feel free to use our car insurance comparison tool to find the one that best suits your needs.

Frequently asked questions about car insurance

What type of car insurance should I take out?

At the very least, you need liability insurance to drive your car. Then you can choose a type of car insurance to suit your needs, whether for collision or comprehensive coverage (optional), or additional protection such as roadside assistance and replacement value (optional).

What are the three types of car insurance?

The main categories of car insurance are liability insurance (mandatory), collision and upset, and comprehensive excluding collision or upset (e.g., fire, theft, vandalism, windshield replacement). These types of car insurance can be combined in a single policy, called All Risks. Finally, additional options can be added, such as replacement value, roadside assistance and car rentals.

What type of insurance contract?

Car insurance policies generally fall into three broad categories: liability insurance (mandatory), collision or upset, and comprehensive excluding collision or upset (e.g., fire, theft, vandalism, windshield replacement). Depending on your needs, you can also choose additional protection. For example, for a new car, you may want peace of mind with replacement cost protection.

What are the different types of insurance?

There are several types of car insurance in Canada. First, liability insurance is mandatory. Collision and comprehensive coverage is optional, as are additional coverages such as replacement cost and replacement value.

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