Car Insurance Coverage

Your guide to understanding mandatory and optional auto insurance coverage in Canada and additional endorsements.

Car Insurance Coverage

Having auto insurance coverage is mandatory in Canada and you can face significant fines if you are caught driving without it. It can also result in difficulty obtaining auto insurance in the future, and even worse, being stuck with the bill for damages and potential lawsuits resulting from an accident caused while driving without insurance. The auto insurance coverage required varies by province, in terms of both type of coverage as well as minimum amount. Coverages are outlined below:

Mandatory Coverages:

  1. Liability Coverage - Coverage protecting you financially if you're found legally responsible for the death or injuries to a person or damage done to their property while operating your vehicle. Coverage usually ranges from $200,000 to $2,000,000 and is mandatory across Canada.
  2. Accident Benefits Coverage - Coverage protecting you financially in the case of injury resulting from a car accident, regardless of who's at fault. It covers medical expenses and loss of income and is mandatory everywhere in Canada except for Newfoundland.
  3. Uninsured Automobile Coverage - Coverage protecting you financially in the case of death or injury caused by an uninsured driver or as a result of a hit-and-run by someone else. It also covers damages to your vehicle by an identified uninsured driver. Coverage is mandatory across Canada.
  4. Direct Compensation - Property Damages Coverage - Coverage protecting you financially if you're involved in a car accident when you're not at fault. It covers damage to your vehicle and its contents and compensates you for the loss of use of your vehicle. Coverage is mandatory in Ontario, Quebec, Nova Scotia and New Brunswick.

Optional Coverages:

  • Collision Coverage - Coverage protecting you financially in the case of damage to your car resulting from an accident where you're found at fault. It also covers damage to your vehicle caused by an unidentified person.
  • Comprehensive Coverage - Coverage protecting you financially from damage other than collision damage done to your vehicle (i.e. theft, fire, vandalism, etc).
  • Specific Perils Coverage - Coverage protecting you financially from specific perils identified in your policy (i.e. fire, earthquake, etc).
  • All Perils Coverage - The broadest coverage available, includes both collision and comprehensive coverage.

Endorsements:

You can also add endorsements to your policy to enhance your coverage. Some of the most popular endorsements are outlined below:

  • Loss of Vehicle Use - Covers the cost of a rental vehicle while your vehicle is being repaired.
  • Damage to Non-Owned Vehicle - Covers you in case you cause damage to another vehicle not owned by you.
  • Waiver of Depreciation - Removes the insurer's ability to deduct depreciation on a vehicle when submitting a claim.
  • Family Protection - Additional coverage if you're involved in an accident with a driver who has no insurance or less insurance coverage than you and doesn't have enough coverage for your claim.
  • Accident Forgiveness - An option offered by some insurance companies in which they wouldn't count your first at-fault accident against you.

It is important to note that regardless of the coverage, an insurance company may deny your claim under the following circumstances:

  • Accidents resulted from the influence of drugs or alcohol
  • Accidents that result in a criminal conviction (i.e. hit-and-run, criminal negligence, etc.)

Given the vast amount of auto insurance coverage options available, it is important to do your homework ahead of purchasing a new policy to ensure you have the appropriate coverage types and limits. You're encouraged to shop around and use our free car insurance comparison service to get several quotes tailored specifically to your needs.

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