Car Insurance Guide for Canadians in 2023

You’ve spent months researching, you’ve managed to save enough money and you’ve finally bought the car of your dreams. You’re now ready to drive it for the first time, unbound by any contract. However, you realize that you cannot drive it anywhere, because you don’t have insurance. Unfortunately, in Canada, just like in most other countries of the globe, driving your vehicle without insurance is an offense.

Insurance requirements for Ontario drivers falls under the Compulsory Automobile Insurance Act of Ontario. Essentially  the owner of a motor vehicle is responsible to make sure  that the vehicle is covered with liability insurance before the vehicle is driven on the roadway. Anyone caught driving without insurance will have to pay a fine of five thousand ($5000.00) dollars.

There is no doubt that auto insurance is one of those things in life that you must have if you don’t cherish paying for it, you’ll certainly appreciate it if your car has been involved in a collision.

 In this article, we’ll dive deeper into how to get the best car insurance for you in 2023. We’ll also take a closer look at the main auto insurance policies available in Canada and look closer at the main factors affecting auto insurance cost.

Who Needs Car Insurance in Canada?

If you’re a motorist in the beautiful country of Canada, then you need auto insurance. Not owning one may lead to serious fines, starting from $5,000 for a first-level conviction up to $50,000 for a third conviction. Additionally, you could have your car impounded and your driver’s license suspended.

As this is not enough, Canadians found driving without valid vehicle insurance are considered by the authorities to be high-risk drivers. As a direct result, they may be required to pay higher premiums by insurance companies, and they are also solely responsible for accidents that caused trauma or death.

So who needs car insurance? Anyone who wants to drive safely while being protected by the umbrella of the law, and every single citizen who is mindful of their own safety and care about their finances.

The Types of Auto Insurance that Exists in Canada

In 2022, there are several types of insurance that Canadians can use. Basically, the minimum level of insurance you can get varies from province to province. Thus, it becomes mandatory to become familiar with your province’s rules and regulations in terms of car insurance.

As a rule of thumb, there are several types of auto insurance you can get today. Let’s explore some of the most common types used in Canada:

1. Collision Coverage

 This unique type of insurance protects you, the driver of the car, from any third-party liabilities. Additionally, it protects you if you hit anything else except a car, such as a guardrail, tree or embankment. If you are involved in a serious accident with a motorist who is not insured, you are protected if you own collision coverage.

 This is a broad level of coverage that usually costs more than the standard one, which is third-party liability coverage.

2. Third-Party Liability Coverage

As the most basic type of auto coverage, third-party liability is recognized all across the regions of Canada. This car coverage protects you from any damage you have caused to someone else’s property. It also keeps you safe should someone got injured because of an accident you caused.

3. Comprehensive Coverage

As the name suggests, this type of car insurance offers you the best range of protection. Not only does it cover related damages to collision or medical care, but it also protects you from floods, fires or theft. Of course, it all comes with a higher cost, since comprehensive coverage premiums are the highest you can pay today.

4. Specified & All Perils Coverage

This fourth type of car coverage protects you from damage done to your car by criminals or thieves. It also protects you from weather damage, such as lighting, fire, earthquakes or windstorms.

If specified perils coverage allows you to choose your own type of coverage based on the perils most common in your area, such as heavy rain or floods, all perils protect your car from any type of weather element or thieves.

Optional Policy Endorsements

In Canada, you can also purchase car insurance if you need to benefit from certain optional policy endorsements. You have 3 main options here:

1. Rented or Leased Vehicles

The insurance for rented or leased vehicles varies from region to region and from insurer to insurer. You can either get short term insurance, which is something Turo provides, or get long-term insurance.

When going for short term insurance, you can use Turo’s own insurance services for the period you are renting your car. As for the long-term, you can keep your insurance separated from the leasing contract. Shop for your own insurance so you can get a better price. When choosing to go with insurance from dealership for your rented vehicles, you’ll pay more in the long run.

2. Transportation Replacement

Replacement insurance is sold separately from basic third-party liability or collision coverage and comes with obvious benefits. In case your vehicle is stolen or vandalized, your claim will not be reduced. Instead, you’ll be able to go to any dealer to get your car replaced. For partial losses, the deductible will be refunded up to $500.

If you own a courtesy car, you’ll be able to get coverage for up to $75 a day.

3. Liability for Damage to Non-Owned Automobile(s)

Also known as OPCF 27, legal liability for damage to non-owned automobiles covers vehicles you don’t own, such as rentals. Any time you’re renting a vehicle in Canada, you can separately purchase a “collision damage waiver” which protects you in case of an accident. The OPCF-27 costs less than the collision damage waiver and is perfect for business people or salespeople who travel a lot and have to rent a new car on a weekly basis.

Deductible vs. Premium Car Insurance in Canada

Understanding deductibles is a must if you want to fully leverage the benefits of car insurance in Canada. A deductible is, in simple terms, the amount of money you are required to pay before your insurance company would pay for their share of the money to cover the damages. You’ll pay the deductible only once, which is when you’ll file the insurance claim.

As a rule of thumb, the higher the deductible amount you’ll be required to pay, the lower your insurance rate will be. As an example, going with a policy that has a $2,000 deductible will allow you to pay 50% less than for a policy with a $400 deductible. The higher the deductible, the lower the premium you’ll have to pay for the insurance.

In Canada, all types of insurance have deductibles. Some policies can even come with multiple deductibles that can vary by the actual cause of loss. Because of deductibles, there might be situations when you would actually save money by not filing a claim.

  Let’s say that you get into a car accident which was your fault in around 60%. That’s an at-fault accident. If the amount you have to pay to repair your vehicle is $400, and your deductible is $450, you should definitely repair the car on your own. In this case, it’s not worth filing a claim.

What are the Main Factors that Influence the Cost of Car Insurance?

If you are anything like most Canadians, you’ll probably find tons of reasons to complain that your car insurance premiums are way too high. You can better understand the cost of your car insurance premiums by discovering the vast multitude of factors that go into that cost.

The most important factor that insurance companies consider when calculating premium cost is the make, model and year of your vehicle. For instance, a sports car from 2015 comes with higher premiums than a sedan from 2013. Things are obvious here. The sports car costs more and is usually driven by drivers with a proven record for reckless driving.

Another aspect insurance companies take into account is driving history. If you are a safe driver who has never got any fines, maybe not even a speeding ticket, you’ll pay up to 80% then someone who has been involved in multiple collisions and has countless speeding tickets. Demerit points, which are being given by the government to those with bad driving behavior won’t affect insurance premium immediately, but they will certainly impact the policy upon renewal.

Another factor that impacts the cost of car insurance is the place of residence. Not many motorists are aware of this, but where you live truly matters in the grand scheme of things. It even goes as granular as neighborhoods and street level. Certain neighborhoods and streets in Canadian cities have a history of filing way more insurance claims than other neighborhoods. Insurance companies study these statistics on a regular basis to determine which neighborhoods have a higher risk associated with them.

It’s important to be cognizant of this factor when determining the actual price of the insurance policy. Of course, auto policies should not motivate you to relocate to other neighborhoods or cities. However, the high cost may be an eye-opener should you wish to relocate in the near future.

Two more factors that have been found to influence the auto insurance premiums are gender and age. Now, car insurance is one of these unique industries where people can be legally “discriminated” based on age and gender. That’s because certain groups of people pose a higher risk than others.

As an example, if you are a 20-yeas old guy, you’ll pay twice as much as a 35-years old woman. However, if you are a senior, you’ll pay less than a 30-years old person. Normally, men pay higher premiums than women.

How to Properly Buy Car Insurance?

The first step in the process of buying car insurance is to determine if you need public or private car insurance. In Canada, residents of Manitoba, British Columbia and Saskatchewan provinces need to purchase their insurance policies from a publicly listed “Crown Corporation”. If you live here, you can only buy a public car insurance policy, together with certain add-ons that can be purchased from a private vendor.

However, if you live in any other territory in Canada, you can choose your own private insurance policy. You can, therefore, compare the best rates and choose the one that suits you best. As for insurance providers, you can find 3 main types: insurance companies, banks or credit unions and independent brokers.

To properly buy car insurance and to pay less, you want to follow certain simple ways that allow you to cut your spending. We’ve listed below some of them:

– Go with a bundle: if you are a homeowner, you can bundle up your home insurance with your car insurance and take them with the same broker or insurance company. You’ll certainly receive a hefty discount for that.

– Offer a higher deductible: another method to pay less when shopping for auto insurance is to go with a higher deductible. By doing this, you’ll save a substantial amount on your premiums. In case of an accident that costs thousands of dollars, paying the deductible will be worth instead of paying from your own pocket.

– Shop around: most Canadians shop for auto insurance while being on autopilot. They are too busy to look around and simply renew their policies with the same company. That is a huge mistake you can make, especially as new, great offers are popping up every few months. By shopping around for the best offer available to you, you’ll be able to gain the peace of mind that you have the best possible deal.

Conclusion

Getting car insurance in Canada might seem like a tedious process. However, you should not be afraid to stay informed and learn as much as possible about this process. By mastering the car insurance process, you’ll be able to save a whole lot of money and gain the peace of mind that you’ve chosen the perfect policy for your needs.

If you want to find the right insurance policy for your vehicle, you can use insurance comparison engines to compare mutliple quotes at the same time to choose the best insurance provider for your needs.