Below is the list of the most commonly asked questions about car insurance in Canada.
1. What insurance coverage do I need to drive a car in Canada?
All drivers in Canada must carry a standard mandatory policy that includes a minimum level of Third-party Liability, Accident Benefits for medical care, Uninsured Automobile coverage, and, in many provinces, Direct Compensation – Property Damage (DCPD).
Coverage requirements vary by province, and if you have a car loan, the lender may require additional coverage to protect its investment. Lenders typically require collision and comprehensive coverage, along with minimum liability coverage. Each provincial government in Canada sets the minimum liability insurance coverage for its drivers.
Moving to a new province may include adjusting car insurance limits to meet that province’s requirements. Lenders have the right to require that a borrower purchase specific levels of car insurance, and these requirements are part of the lender’s terms and conditions. Borrowers must comply with the terms of the loan agreement or face lender action.
2. What is ‘accident forgiveness’?
Accident forgiveness (aka OPCF 39 in Ontario) maintains a driver’s auto insurance premium rates after an at-fault accident. By not raising the driver’s premiums after a first accident, the insurance company ‘forgives.’ However, adding accident forgiveness to the car insurance policy is important before an accident occurs.
Most insurers charge higher premiums for this option. Note that an insurance company’s accident forgiveness terms and conditions may not cover a driver’s specific damages. All car insurance companies in Canada have different limits or exclusions cited in their accident forgiveness terms. Of course, accident forgiveness doesn’t transfer with the driver when the insurance provider changes.
3. What is a car insurance deductible?
A car insurance deductible is the amount of money the driver pays when settling a car insurance claim. For example, if the Canadian driver carries collision and comprehensive insurance, he may have two potential deductibles (one for each coverage, and they can be different amounts). The deductible amount is relevant in almost every comprehensive claim scenario.
In most cases, the driver’s insurance company subtracts the deductible from the money needed to pay the claim. Agreeing to a higher deductible can help a driver pay lower car insurance premiums. Conversely, smaller deductibles usually imply relatively higher car insurance premiums. If you’re a good driver and willing to assume more financial risk if an ‘at-fault’ accident happens, higher deductibles can help save money on car insurance.
4. Why do I have ‘no-fault’ insurance? Is that a good thing?
‘No-fault’ insurance is a process that hopes to reduce the time necessary to pay claims. Each insurance company involved in the claim pays its insured’s claim.
In a no-fault system, your own insurer handles your claim directly to speed up the process. While this removes the right for insurers to ‘subrogate’ or sue each other for property damage, the at-fault driver is still held responsible through a record on their insurance file and a likely premium increase.
Fault is determined by specific provincial rules, such as Ontario’s Fault Determination Rules, which insurers use to objectively assign responsibility.
5. How does my insurance company decide what my car is worth after an accident?
A “total loss” can involve offering the driver the depreciated value rather than the cost of a new car. However, drivers of a new auto can purchase an optional ‘waiver of depreciation’ (aka OPCF 43 in Ontario).
If a car accident occurs within two years of purchase, the driver receives the car’s purchase price, not its depreciated value. The ‘waiver of depreciation’ must be written into the insurance policy before an accident happens; it cannot be retroactively purchased. Drivers without the ‘waiver of depreciation’ receive the car’s depreciated value as determined by the insurer.
6. Can I shop for new car insurance before my old policy expires?
Yes. There’s no reason to wait for an existing car insurance policy to expire before shopping for new car insurance rates. Shopping and comparing new car insurance quotes can save money. A great way to know if you’re overpaying for car insurance is to use MyChoice’s car insurance comparison platform.
When switching insurance providers before a policy expires, note whether a ‘cost of cancellation’ penalty applies. Ask about additional fees in a new policy to compare the actual coverage amounts from both insurers. Since there is no cost to compare competitive auto insurance rates, it’s a good practice to shop for car insurance regularly.
7. What is the difference between a car insurance broker and an agent?
Drivers in Canada can purchase car insurance directly from an insurance company, through an insurance agent, or through an insurance broker. An agent works directly for only one insurance company. They can only sell that company’s insurance.
Unlike the agent, a broker has access to many insurance companies’ products and services. The broker helps to compare different coverage choices and costs. The choice of which car insurance policy to purchase through the broker is always yours. Learn more about the differences between a broker and an agent in our article.
8. What is the best way to get a good car insurance quote?
You can easily get a car insurance quote online with Mychoice within a few minutes. Once you provide your personal information (e.g., driving history) and the car you want to insure, you can get a quote instantly.
“Getting a car insurance quote with MyChoice is fast, simple, and transparent. In just a few minutes, drivers can compare personalized rates from top Canadian insurers and understand exactly what they’re being offered — no guesswork, no hidden catches. Our goal is to make car insurance shopping as effortless as possible so Canadians can make informed decisions with confidence.” – Matthew Roberts, COO, MyChoice
9. How do I file a car insurance claim?
After an accident, pull over safely and call 911 if there are injuries. Contact your insurance company as soon as possible and provide key details about the incident, including when and where it happened, what occurred, and information about everyone involved.
An insurance adjuster will review the claim, ask follow-up questions, assess damage or injuries, and guide you through repairs or settlement. Once repairs or compensation are finalized, the claim is settled and closed.
10. Who can drive my car under my insurance?
While insurance follows the car, this generally applies only to ‘incidental’ users, such as a friend borrowing the vehicle once. Any person who lives in your household or regularly uses the car must be listed as an occasional driver on your policy.
If another person has an accident in your car, you will bear financial responsibility for the accident. If the driver is deemed ‘at-fault,’ your auto insurance rates could rise. Regardless of whether the driver has her own auto insurance policy, your car insurance policy is in force in your vehicle.