Looking for new Car insurance can be confusing, especially when each province has different rules. So in this guide, we prepared the top 10 most frequent questions and answers.
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.
2. What is ‘accident forgiveness’?
Accident forgiveness maintains a driver’s auto insurance premium rates after an at-fault accident. In plain terms, the insurer agrees not to count your first at-fault accident against your rate at renewal. 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, they may have two potential deductibles (one for each coverage, and they can be different amounts). Most policies are written with a $500 or $1,000 deductible on each of those coverages, while Ontario’s Direct Compensation – Property Damage coverage carries no deductible at all unless you deliberately add one to trim your premium.
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. This means lower 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.
Read More: Car Insurance Deductibles Explained
4. Why do I have ‘no-fault’ insurance? Is that a good thing?
‘No-fault’ is one of the most misunderstood terms in Canadian insurance, mostly because the name suggests nobody gets blamed. Even though the name tries to protect everyone, someone is still held responsible when a collision occurs. What no-fault actually means is that after a collision, you deal with your own insurer for your own injuries and vehicle damage instead of chasing the other driver’s company, which pays claims faster and keeps routine fender-benders out of the courts.
Fault is determined by specific provincial rules, such as Ontario’s Fault Determination Rules, which insurers use to objectively assign responsibility. In Ontario, those rules are set out in Regulation 668 under the Insurance Act, which is a scenario-by-scenario chart that allows an adjuster to assign each driver anywhere from 0% to 100% of the blame, regardless of what the police report says.
Read More: A Guide to No-Fault Insurance in Ontario
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).
The depreciation period depends on the wording your insurer files, and while 24 to 48 months from the purchase date is common, some versions run shorter or longer, so you should read the endorsement itself. The ‘waiver of depreciation’ must be written into the insurance policy before an accident occurs. It cannot be purchased retroactively. 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, a ‘cost of cancellation’ penalty might apply. Ask about additional fees in a new policy to compare the actual coverage amounts from both insurers.
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. In Ontario, the two are even regulated by different bodies: brokers are licensed through the Registered Insurance Brokers of Ontario (RIBO), while agents and the insurers they represent are regulated by FSRA.
8. What is the best way to get a good car insurance quote?
The best way to get a car insurance quote is to compare offers from several insurers rather than contacting only one company. Rates can vary significantly because every insurer evaluates your driving history, vehicle, location and coverage needs differently.
Using an insurance comparison platform like MyChoice is usually the fastest place to start. You can enter your information and get quotes from multiple providers in a few minutes without paying a fee or contacting each insurer separately.
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. After an accident, make sure to photograph the vehicles, plates, licences and insurance slips, and the wider scene. Adjusters settle faster when the file arrives with evidence.
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 their own auto insurance policy, your car insurance policy is in force in your vehicle.