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How To Get The Best Car Insurance in Canada – 10 Key Facts

Automobile insurance can be tricky to understand with complex terminologies and a whole bunch of rules and regulations that differ by province. However, a sound knowledge of insurance basics can help you navigate the complex process of buying insurance for your vehicle. Here are 10 FAQs to help you do just that.

Is it mandatory to have automobile insurance in Canada?

Yes, Canadian law requires that any vehicle which will be driven has insurance coverage. While every province has its own set of requirements regarding auto insurance, buying a minimum amount of third party liability insurance is mandatory across Canada.

However, experts recommend that you should purchase broader coverage and not just liability insurance so that you’ll have adequate cover for all eventualities.

Who pays for damages in case of an automobile accident?

If your province follows the no-fault insurance system (Ontario, for instance), you can file a claim with your insurance company regardless of which party was at fault for the accident. This simplifies the claim process as you need not chase the other party’s insurance provider for compensation.

This means that if someone’s vehicle scraped your car or your vehicle rear-ended another car, you will make a claim with your own insurance company in either scenario.

Remember that no-fault insurance does not mean that you will never be considered at fault for an accident. Your insurance company will use a set of federal rules to ascertain if you were at fault. If they find that the accident was caused by you, they may still approve your claim but may increase your premium.

Will the insurance company pay all expenses I’ve incurred after an accident?

No. They will pay all covered expenses beyond the auto insurance deductible on your policy. For instance, if your policy has a $200 deductible, you will have to pay that sum out of pocket and then the insurance cover will kick in to cover the remaining costs up to a certain amount.

Choosing a higher deductible can lower your premium rate, as your insurance company will have to pay you less in case of an accident.

Can I register my vehicle without a driver’s license? 

No, in Canada you need to have a valid driver’s license to register and drive a car. However, you don’t need a license to purchase a car. In addition, you need a license to purchase automobile insurance, which is mandatory for all vehicles driven in Canada.

How does an automobile insurance company calculate insurance premium?

Your insurance provider determines your premium based on a number of factors, including the make and model of your vehicle, its safety features, your driving history, your age, and how much you use your car. It is advisable to get quotes from different providers and make a detailed comparison before buying automobile cover. Also, avoid falling for the lowest quote as it may not provide adequate coverage.

Will my credit score affect my insurance premium?

Yes and no. This depends on whether the auto insurance companies in your province have access to and are allowed to use your credit rating to determine your insurance premium. You should also know that even if an insurer is legally allowed to assess your credit history, they may not use it to calculate your premium rate.

What happens to my existing vehicle insurance if I move to another province?

You will need to purchase a new insurance policy in the province where you’re moving, but that can wait until your move is complete. Till then, you should continue to carry your present auto insurance.

If you’re moving, get a claims experience report from your insurance provider, as the new insurance company will want to see it to know your claim history. In addition, you’ll need to exchange your old driving license for a new one within the time limit applicable in the new province.

Find out the minimum automobile insurance requirements in the province, get a few quotes to compare and purchase a policy that gives you the best value for your buck. Remember that for an accident that occurs when you’re driving your company vehicle for official work, Worker’s Compensation should cover a personal injury at work—that is injuries sustained while driving to fulfil your employment duties.

I will be using a rental car on an upcoming vacation. Where should I buy insurance for the same?

You need not buy new insurance cover for your rental car as your personal auto insurance applies to rental cars as well (provided your insurance policy covers physical damage). However, you can choose to purchase insurance from the rental company if it is providing greater coverage.

You’ll need to inform your insurance company about the rental and pay a small amount for the extended cover. Do buy coverage from the rental company if you don’t have auto insurance.

I will be in Canada for just a few months. Can I buy auto insurance for a short duration?

Yes, some insurance companies do offer short-term automotive insurance. It may take some research to find, but you can get cover for as little as 24 hours up to a few months as per your need.

This type of cover is a worthy option if, for instance, someone else is going to use your car for a short period but you don’t want to add that individual to your existing insurance policy. Another situation when short-term cover may be useful is when you’re in the process of selling your old car after buying a new one and need to continue coverage till the old vehicle gets sold.

Do traffic violation tickets impact automobile insurance premiums?

Yes. Your traffic ticket record can increase your premium. But you can avoid this by proactively purchasing a top-up policy that forgives your first violation, in addition to your automobile insurance coverage. Also note that insurance companies care more about the type of traffic violation you’ve incurred than the number of tickets you have on your record.

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