Car insurance in Canada

Car insurance can be tricky, especially if you're new to car insurance in Canada. If you're wondering what car insurance is, what coverage options are available to you, and how to get it, we've briefly gone over some common questions to help you get a better grasp on the topic. And since it’s illegal to drive your car without insurance, not to mention insurance is there to protect you as the owner/driver, it’s a good idea to really understand how car insurance works and what type of insurance you need to purchase before you hit the open road. Or any road for that matter. So, let's start off with the basics.

What is car insurance, and do you need it to drive?

Car insurance is mandatory protection you need to purchase to protect you from financial loss that comes with any potential accidents. For example, having car insurance can help protect you if you're held responsible for an accident that causes damage to another person or their car. And with enhanced coverage, it can even protect you from having to pay for your own car's damage as a result of an at-fault accident. Once a contract is made between you and your insurer, you'll be responsible for paying a premium which will keep your car insurance policy active and ready should anything happen to you and/or your car. Because an insurance policy follows the car and not the driver, you'll need insurance on your car to legally drive it in Canada. But the policy must reflect all drivers and their proper assignment. If for example, you're licensed, don't have your own car but are frequently driving someone else's car, you'll likely need to be added to that person's car insurance policy in order to be properly protected. If, on the other hand, you've leased or financed your car or bought it outright, you'll need to purchase a car insurance policy for your own car before driving off in it. Apart from the mandatory coverage that's required by law, there are also optional coverages you can add to your policy to enhance your protection, which we'll go into more detail below.

How does car insurance work in Canada?

Because it changes from province to province, there isn’t a one size fits all answer to this question. And although car insurance is mandatory from coast to coast, it is regulated on a provincial level, not nationally. Then, car insurance in Canada is also divided into public insurance and private insurance. But of course, just to keep things interesting, some provinces run on a bit of a hybrid of both systems. Let’s jump in to see examples of these different types and how they differ.

What’s public car insurance?

Public car insurance means that the company that provides the insurance for your car (and everyone else in that province who buys car insurance) is a government-owned corporation. With the public insurance system, you may also have the option to increase your coverage with a privately-owned, publicly traded, or mutual insurance company.

What’s private car insurance?

Private car insurance means that the companies that offer insurance to you (and everyone else in the province) are privately owned, publicly traded, or mutual companies. For example, TD Insurance is a wholly owned subsidiary of TD Bank, which is a publicly traded company, and we offer many different types of car insurance coverages.

What provinces currently offer public vs private car insurance?

In British Columbia, Saskatchewan and Manitoba, the government runs the car insurance industry. However, in British Columbia only, non-public insurers can offer optional additional coverages. In all the other provinces and territories, privately run insurers provide car insurance. Except for Quebec, which uses a hybrid model of the two. In Quebec, the public insurer manages insurance for bodily injuries only, the other coverages (for example, Civil Liability, Collision and/or Comprehensive) are provided by private insurers.1

What types of car insurance are there in Canada?

As we mentioned above, there is mandatory insurance that differs from province to province and there is also enhanced coverage (also referred to as optional or add-ons). Below are some of the coverages that are offered through TD Insurance:

Mandatory Coverage:

  • Liability – If you injure someone or damage property and are sued for damages, the cost of those damages may be covered.
  • Accident Benefits – Provides benefits if you are injured in an automobile accident, regardless of who caused the accident.
  • Direct Compensation – Damages to your car are covered by your insurer if you're not at fault (not mandatory in Ontario). However, at-fault damages would be covered by optional collision coverage.
  • Uninsured Automobile Coverage – Medical costs and damage are covered if an uninsured driver is at fault.

Enhanced/Optional Coverage:

  • Specified Perils – Protects your vehicle from specified perils such as losses caused by fire, floods, hail or theft.
  • Comprehensive – Covers all other insured damage caused to your vehicle (except collision or upset).
  • Collision or Upset – Covers damage to your vehicle caused by a traffic collision with another vehicle or object. Interesting in learning more? Read our article about comprehensive vs collision insurance now.
  • All Perils – This option combines the coverages of Collision or Upset and Comprehensive.

How do I get car insurance?

For private car insurance, most insurance providers offer online quotes and that’s the perfect first step. With TD Insurance you can get a quote online in minutes. And then you can either purchase your insurance online or you can do it over the phone with a TD Insurance licenced advisor. It’s a quick, easy and convenient process from beginning to end. If you’re looking for more information you can also read this introduction on how to get car insurance.
For public car insurance, it’s best to check with the government-owned corporation to get the most accurate information on how to get the right car insurance.

How are car insurance premiums calculated?

Whether your insurance is provided by a public or private insurer, there are different factors such as the type of car you drive, your driving record, and the type of coverage you choose that all affect how much you pay. Here is some more detailed information about how car insurance premiums are calculated.

Are there any ways I can save on my car insurance?

Yes, of course there are lots of opportunities to save with TD Insurance. From bundling your home and car insurance together to receiving preferred rates for being an alumni or professional, there are many different ways to save. Check out these simple tips to help you save on car insurance.

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The content on this page is for general information purposes only and does not constitute legal advice. Coverages described herein may be subject to additional eligibility criteria, limitations and exclusions. In the event you make a claim, potential indemnification is also subject to the receivability of the claim and the type of coverage you bought.

In the case of conflict between the content on this page and your policy wordings, your policy wordings shall take precedence. Please speak to an Advisor or consult your policy wordings for further details.