Table of Contents Hide
In accordance with Canadian law, each Canadian in each province that is a vehicle owner must have car insurance to use their vehicle. Your driving license might be suspended if you’re caught operating a vehicle without insurance coverage.
Additionally, there is a possibility of having your vehicle confiscated and paying a substantial penalty. In Ontario for instance, it’s prohibited to drive an uninsured vehicle. Penalties for vehicle owners, lessees, and drivers who don’t carry valid car insurance range from a minimum of $5,000 to as high as $50,000.
Besides these penalties, drivers also face an increase in their insurance premiums, which may be expensive in the long run.
Since car insurance is so important in Canada, you should understand certain things about the mandatory insurance required. So, read below to find out everything you should know about car insurance in Canada.
How Does Car Insurance Work in Canada?
Car insurance is comparable with home insurance, but you are getting insurance coverage for your car instead of your home. The premiums you recompense are in accordance with the insurer’s anticipated annual fee of covering your vehicle. In return for accepting the risk of your vehicle, you need to pay your insurance company monthly or annual payments.
Your car insurance company afterward assembles all the premiums from the drivers it covers and places them into a single giant pool. Later, the insurance provider utilizes that pool of premiums for covering the losses of the individuals that file claims throughout the year.
The losses you are covered for are usually declared in your contract with your insurer. So, prior to signing up for coverage, ensure you read the contract entirely to make sure you comprehend the extent of your coverage.
Types of Car Insurance In Canada
The minimum amount of car insurance needed in Canada varies by province and territory, so it’s essential to become familiar with the local regulations to make sure you comply.
Third-Party Liability Coverage
Third-party liability coverage is the most average type of car insurance in Canada and is obligatory. It protects you against paying any compensation to someone’s vehicle as a policyholder. You also are covered in case someone is harmed due to an accident caused by you.
Collision coverage protects you not only from third-party liability but as well from crashing into anything other than a vehicle. This coverage covers you if you have an accident with another driver who doesn’t have insurance.
Comprehensive coverage offers the widest protection among the rest of the coverages and is generally the most expensive. It mainly covers medical and crash-related damages, while it can also cover flooding and theft.
What Affects Car Insurance Costs in Canada?
In Canada, there are various aspects that car insurance providers base your premiums on.
Vehicle Brand, Model, and Production Year
Your premium is considerably affected by your car’s brand, model, and year of production. If, for example, you own a sports vehicle, you will most likely need to pay a higher premium in comparison with owning a sedan.
Location of Living
Your place of residence can be the result of you paying a greater premium than others. This is as a result of you perhaps living in a neighborhood where there’s a history of multiple car insurance filed claims. As a result, be ready to pay extra if your area has a lot of burglaries and collisions.
If you haven’t received a lot of speeding tickets and you’re a careful driver, you are looking to pay lower premiums. Anyway, anticipate paying more if you have multiple speeding tickets or if you have already been involved in a crash.
Acquiring demerit points for driving violations such as speeding and dooring a bicyclist may also impact your insurance premiums. Demerit points won’t affect your car insurance expenses immediately, however, they will once your policy is due for renewal and your insurer runs a background check on your driving history.
Age and Gender
Insurance is among the very few sectors that can lawfully discriminate in terms of prices based on age and gender. Men pay higher insurance premiums than women because men are known for engaging in unsafe driving behavior. Nevertheless, regardless of what gender you are, you can expect reduced premiums if you’re older.
You have to understand how much coverage you need along with which coverages to consider including in your policy. Despite the fact that every province has a minimum requirement, it isn’t always enough.
Given the broad range of vehicle insurance coverage options obtainable, it’s vital to do your research prior to purchasing a car insurance policy to ensure you have the appropriate coverage. Shop around to acquire quotes from different car insurance providers tailored to your specific needs.