“One-way insurance” isn’t an official type of car insurance. It usually refers to a policy with only the mandatory coverages. The damage to your own vehicle from a collision, theft, or severe weather may not be covered. For this guide, our team reviewed FSRA’s standard Ontario auto-coverage guide and current auto-insurance choices, optional and DCPD-related coverage, plus the Financial Consumer Agency of Canada’s overview.
Keep reading to learn what one-way insurance usually means, which losses may still be covered, what you give up by removing physical-damage protection and when the savings may not be worth the risk.
What Is One-Way Car Insurance?
“One-way insurance” is not a standardized policy. In Ontario, it usually means keeping mandatory coverage while omitting some optional protection for damage to your own vehicle. Since your declarations page shows exactly which coverages your policy includes, check what would pay after an at-fault crash, theft, fire, hail and a qualifying not-at-fault collision before choosing it.
Read More: What Auto Insurance Coverages Are Mandatory in Ontario?
Check What Your Policy Actually Covers
Ask your insurer what would pay after an at-fault crash, a single-vehicle collision, theft, hail, fire, vandalism and a not-at-fault collision that meets Ontario’s DCPD requirements. Then compare those answers with the certificate and the FSRA standard-coverage guide. A policy described as “one-way” can still vary depending on DCPD, collision, comprehensive, specified perils and endorsements.
In Ontario, confirm the mandatory coverages and every optional physical-damage coverage shown on the declarations page, then ask which policy section would cover each type of loss listed above.
One-way vs Two-way Car Insurance
In everyday use, “two-way” usually means the policy also includes selected protection for damage to the insured vehicle. The list below describes common optional coverages, but each one has different situations in which it applies, exclusions, and deductibles.
- Collision coverage: This covers the cost of repairing or replacing your vehicle after an accident. If the cost to repair is higher than the value of your car, your insurer may pay enough to cover the cost of replacing the vehicle.
- Comprehensive coverage: This covers almost anything outside of accidents, like damage from natural disasters such as floods, earthquakes, and hailstorms, as well as theft, vandalism, and collisions with animals.
- Accident forgiveness coverage: Think of this as a free pass for your first accident. Usually, insurers increase premiums the more claims you’ve made. But with accident forgiveness, the first claim won’t count.
- Loss of use coverage: This covers the cost of renting a vehicle or taking public transportation if your car is damaged and needs to be taken in for repairs.
When Reducing Collision or Comprehensive Coverage May Be Unsuitable
A financed or leased vehicle may require physical-damage coverage under the contract. Also consider whether losing the vehicle would interrupt work, caregiving or medical travel, whether emergency savings could replace it, the annual premium saved, deductibles, your vehicle’s estimated cash value , rental needs, theft and weather exposure.
Read More: How Collision & Comprehensive Coverages Work in Ontario
Who Can Benefit from One-way Car Insurance?
One-way car insurance isn’t for everyone, but it can be a great option for the following people:
Financial and Legal Implications of One-way Car Insurance
You will have trouble finding a lender who will finance a vehicle without collision or comprehensive coverage. Most lenders require financed vehicles to have these two types of coverage and may require specific levels of collision and comprehensive coverage.
Can I Get Sued if I Only Have one-way Insurance?
You can get sued for a car accident whether you have one-way or two-way insurance. You can get sued even if you have insurance for four reasons:
- The claimant and your insurer can’t agree on who was at fault and whether you should bear any responsibility for the accident. In this case, a court may have to determine the percentage of fault that each party should bear.
- The claimant and your insurer cannot agree on the settlement amount.
- The deadline to file a lawsuit is getting closer, and the involved parties don’t have time to negotiate.
- The value of the case exceeds your coverage limit, and you have assets.
Note that one-way insurance is the bare minimum coverage, so it’s possible that your insurance won’t cover the cost of damages in a major accident. This is when one-way insurance could leave you personally responsible for the extra costs over your insurance coverage. The claimant’s legal team could assess whether you can cover the remaining costs with your personal assets.
In any case, to avoid additional legal issues, make sure to report a car accident as soon as it happens.
How to Manage the Risks Associated with One-way Car Insurance
If you don’t want to purchase two-way insurance but are worried about the risks, the following tips may help give you some protection:
- Set up emergency funds: make sure you have enough funds to cover yourself in case an accident happens. Have enough stashed for medical bills, repairs, lost income, and the cost of finding another mode of transportation while your vehicle is out of commission.
- Drive less: The less you drive, the lower your risk of being involved in an accident.
- Drive safely: Follow traffic rules, maintain a safe distance between you and the vehicle ahead of you, and make sure you’re always visible to other drivers.
- Install a theft-deterrent system: To minimize the risk of theft, purchase anti-theft devices like brake and wheel locks, GPS trackers, and Faraday bags.
- Consider getting usage-based insurance (UBI): Also known as pay-as-you-go insurance, this uses telematics to log data on your driving habits. With this data, your insurer will provide a rate based on your performance.
- Try temporary or short-term insurance: Some insurance providers offer temporary insurance that lasts anywhere from a few days to a few months. Not all provinces allow temporary options.