Automobile Assurance

Car insurance in Canada: Everything you need to know

To the point Looking for new car insurance? Here's everything you need to know about car insurance in Canada.

Canadians in all provinces and territories who own a vehicle must have auto insurance in order to use it. Your driving license can be suspended if you’re caught driving without car insurance, with the possibility of having your car confiscated and paying a hefty fine. This article explains the importance of car insurance and how it works, as well as strategies for reducing your car insurance premiums and tools for comparing car insurance.

How does car insurance work in Canada?

Car insurance is similar to home insurance, in that you get insurance coverage for your asset. In this case, for your car. The premiums you pay are based on the annual cost the insurance company expects to cover your car.

In exchange for this insurance coverage, you make monthly or annual payments to your auto insurer. Then, in the event of a claim, you have to pay an insurance deductible. Your insurance company collects all the premiums from the drivers it insures, and bundles them together. It uses these sums to cover claims throughout the year.

The damage for which you are covered and the conditions are specified in your insurance contract. Before taking out car insurance, be sure to read your contract carefully to understand your coverage. Review the terms and exclusions carefully.

What are the different types of car insurance in Canada?

Canada’s car insurance laws differ by province and territory. So it’s essential to familiarize yourself with the rules in force in your area.

Liability insurance

This coverage is mandatory to drive your car in Canada. As an insured, it protects you against the risk of having to pay for damage to other people’s property. You’ll also be covered if someone is injured or killed as a result of an accident for which you are responsible. The minimum coverage required varies from province to province, but it must at least cover the medical expenses of anyone injured in an accident. Typically, liability protection ranges from $1 million to $2 million.

Collision Coverage and Upset Coverage

Collision coverage protects you not only against third-party liability, but also against the risk of collision or rollover. For example, a collision, rollover or hit-and-run. This higher level of protection generally comes at a higher price than liability coverage. What’s more, this auto insurance coverage may be mandatory if your vehicle is financed.

Comprehensive Coverage

This protection covers damage without collision or upset, ranging from theft, vandalism, fire, windshield replacement to weather-related damage. Check conditions and exclusions, if any.

All Risk Insurance

This coverage combines Collision Coverage and Upset Coverage as well as Comprehensive Coverage (theft, vandalism, fire, windshield replacement and weather-related damage) in a single policy.

Often, a car insurance policy can be difficult to understand. So don’t hesitate to talk to an insurance agent or P&C broker like YouSet.

Additional Car Coverage Options

You may want to consider adding additional coverage to your auto insurance, including :

  • Replacement Cost Coverage: protection that provides a comparable new car in the event of theft or total loss.
  • Rented or borrowed vehicles coverage: protection that covers the cost of repairs or replacement of a rented or borrowed car, and avoids paying for a rental company’s insurance coverage, often limited to Canada and the United States.
  • Travel expenses: coverage for travel expenses if you are unable to use your car for several days due to an accident. For example, the cost of hiring a replacement vehicle, public transport or cab fares, etc.
  • Roadside assistance: protection that covers the cost of roadside assistance, often 24 hours a day, 7 days a week, depending on the region and insurance coverage.
  • Accident benefits: protection that pays compensation in the event of death following a car accident.
  • Accident Forgiveness: protection against insurance premium increases at renewal following a claim (e.g. collision or theft), often limited to one or two at-fault or not-at-fault claims.

Accident benefits

When you’re in a car accident, your accident benefits cover medical bills and loss of income, among other things. However, compensation amounts vary from province to province. You should therefore check the rules in force in your area.

Finally, don’t hesitate to compare different insurance products using a car insurance comparator.

How much coverage do you need?

You must choose the amount of insurance coverage and benefits to include in your policy according to your needs. Although requirements differ from province to province, the minimum amount of coverage is not always sufficient. Consider, among other things, the value of your car and the financial consequences of a serious accident. To help you determine the amount you need, don’t hesitate to contact an insurance company or broker like YouSet.

What influences auto insurance costs in Canada?

Car insurance companies base their premiums on a number of characteristics.

Your vehicle

The make, model and year of production of your car have a considerable impact on your premium. For example, if you drive a sports car, you’ll probably pay a higher premium than for a sedan. The main reasons for this are that sports cars are more likely to be involved in accidents and have a higher retail value. The same applies to a new car compared to a used car, because the value of the car is different.

Your driving history

Your driving history has a direct impact on the price of your insurance policy. For example, if you’re a safe driver, you can expect to pay lower premiums. However, expect to pay more if you have multiple tickets (e.g. speeding) or insurance claims (e.g. collisions).

Your traffic tickets

The accumulation of demerit points for traffic tickets such as speeding can also have an impact on your car insurance premiums. While demerit points won’t have an immediate impact on the cost of your car insurance, they will when you renew or change insurers.

Your place of residence

Your neighborhood can have an impact on your car insurance premium. For example, if you live in an area with a high history of insurance claims.

Your age and gender

Depending on your age or gender, you can expect higher or lower premiums. For example, young and older drivers often have higher car insurance premiums, considering the higher risk of claims. What’s more, men’s car insurance premiums are generally higher than women’s, as men are reputed to behave more riskily behind the wheel.

If necessary, contact an insurance agent or P&C broker like YouSet to discuss the impact of these factors on your insurance premium.

How can you reduce your car insurance premiums in Canada?

As a general rule, there are several ways to reduce your car insurance premium, in addition to offers and discounts based on your profile.

Increase your deductible amount

In the event of a claim, your insurance deductible is the amount you have to pay out of pocket before your insurance company pays. You could save a lot of money on your monthly premiums if you choose a higher deductible amount. Consult your insurance company to find out about the different deductible options available to you.

Combine your home and car insurance

To reduce your insurance premiums, you can group your car and home insurance with the same insurance company. In this way, you can obtain a discount or a customized offer. For example, with our partner YouSet, you can save up to an additional 15% when you combine your car and home insurance.

Get several car insurance quotes and compare

Don’t make the mistake of renewing your auto insurance policy without getting several quotes. Don’t settle for the first quote you receive. Conversely, get several car insurance quotes and compare them before making a decision. For most insurance companies, you can get quotes online or over the phone (check their website).

Contact a car insurance broker

To reduce the number of quotes, you could contact a general insurance broker like YouSet. Insurance brokers have access to several insurers and will usually present you with the best offer. What’s more, they often have access to exclusive discounts. Make sure you have your information on hand before contacting an insurance broker.

Start here: Compare car insurance

How do I buy car insurance in Canada?

Generally speaking, finding an insurance company and taking out a car insurance policy is a relatively straightforward process. You can contact several insurance companies or contact an insurance broker. But you can also compare car insurances online before contacting a professional.

Car insurance broker

A person who sells insurance for various insurance companies. The broker will scour the market for you to find the ideal insurance coverage for your needs, at the best price.

Car insurance company

As representatives of a single insurance company, insurance agents will provide you with a quote from their company. In this case, you should also do your research with other companies to make sure you get the best coverage for your needs and at the best possible price.

Compare car insurance prices online

You can compare and even take out a car insurance policy yourself online. This method has many advantages, because you control exactly what you’re looking for. However, as insurance is a complicated subject, you may want to speak to a professional to explain the terms and conditions of the various offers. You can use our car insurance comparator to get several car insurance quotes.

Bottom Line

In short, there is a wide range of car insurance coverage options. Before taking out a new policy, it’s essential to research and compare car insurance quotes to find the one that best suits your needs and budget. Finally, make sure you understand the rules in force in your region, as laws differ from province to province.

Frequently asked questions about car insurance

Which is the best car insurance company?

The best car insurance company in Canada varies according to several factors. Sometimes, insurance companies compete with each other for specific regions or market segments. So car insurance policy offers can be more competitive for those who meet these criteria.

What's the cheapest car insurance on the market?

Car insurance companies base their premiums on a number of factors, such as your vehicle, driving history and place of residence. So the cheapest car insurance on the market for you is not necessarily the same as for other people. On average, Quebec has the lowest cost of auto insurance in the country ($796/year or $66.33/month).

How do I cancel my car insurance?

You can cancel your car insurance during the term of your contract or when you renew it. Talk to your insurance agent about possible options and cancellation fees, if any.

What is the average price of car insurance in Quebec?

According to the latest data, the average cost of car insurance in Quebec is $796 a year, or $66.33 a month. However, the price of car insurance varies considerably depending on your age, gender, driving experience and region.

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Vincent Morin
My name is Vincent and I've been a stay-at-home parent to two young boys since achieving financial independence in 2021 (FIRE). Previously, I worked for 12 years in financial technology for a major US investment bank (G-SIB). I'm passionate about personal finance, stock market investing, reading, writing, cycling and gardening. I'm also the founder of Retraite 101, a personal finance blog followed by over 20,000 people on social networks and quoted in several media, blogs and finance books. Despite early retirement, I continue to write about personal finance to share my passion with Quebecers and motivate them to take charge of their finances.

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