Updated: Jan 8
Why you need car insurance You must have car insurance if you own a car or other vehicle. Car insurance may protect you from:
having to pay to repair your car or other vehicle if it's damaged or in an accident
liability claims if you're held responsible for an accident causing damage to another person’s vehicle or injury to other people
Insurance companies may refer to car insurance as property and casualty insurance. Property and casualty insurance also includes home insurance, business insurance and disaster insurance.
Reminder If you decide to lend your car to someone who isn't listed on your insurance policy and they have an accident, your own insurance record may be affected and your premiums may increase.
Who a car insurance policy covers If you get into a car crash, your insurance may cover:
other people who are involved
In some provinces, injured passengers or other people involved in the accident who have their own insurance policy must make a claim under their policy first.
The principal driver is the person who drives the car most often.
Additional drivers are other drivers in the household who may use the car as part of their routine, such as driving to school or work. Your insurance policy must list additional drivers. If additional drivers have a poor driving record, your premiums may increase.
Occasional drivers are drivers who only use the car from time to time.
What a car insurance policy covers Coverage is the maximum amount of money the insurance company will pay you if you make a claim for a loss or an event covered by your policy.
Mandatory insurance coverage Canadian provinces and territories require drivers to have mandatory coverage. Some provinces may require more coverage than others.
Liability insurance Liability insurance covers losses, such as injury or death, which your vehicle causes to other people. It also covers damage your vehicle causes to other vehicles. If the cost of the losses or damage is more than your liability limit, you'll need to pay the balance of the settlement yourself. Liability insurance does not cover the cost of repairs to your own vehicle. You may need to consider additional insurance to cover these costs.
Accident benefits/bodily injury insurance Accident benefits cover the cost of your own medical expenses and loss of income when you're in a car accident. In Quebec, you're automatically enrolled for insurance that covers bodily injury. Premiums are paid as part of your driver’s licence registration. You don't need to buy extra coverage for this.
Additional insurance coverage Your car insurance policy may also provide you with additional benefits.
Collision insurance Collision insurance covers the cost of repairing or replacing your car if you hit another car or object. This is sometimes included with your mandatory insurance coverage. Ask your insurance company what coverage your policy provides.
Comprehensive insurance Comprehensive insurance covers the cost of repairing or replacing your car due to other types of damage or loss. This may include:
damage to your windshield
Comprehensive insurance doesn't cover loss or damage to your car if you hit another car or object in a collision. Ask your insurance company what coverage your policy provides.
Optional insurance coverage Depending on your driving record, you may not be eligible for all types of optional insurance. You can to buy extra insurance to pay for risks not covered in your basic policy. Insurance companies call this a rider or an endorsement. You'll pay extra for this. You may also want to consider if you'd need additional insurance coverage for:
renting a car or using alternate transportation while your car is being repaired
repair to physical damage to a rental car
emergency road-side assistance
collision forgiveness which keeps your premium from increasing following the first accident for which you're at fault
depreciation to make sure you receive the full value that you paid for your car
Ask your insurance company what your policy covers and does not cover. Ask for what risks you might need extra coverage.
What a car insurance policy does not cover Most car insurance policies don't cover the loss of personal possessions, such when a thief steals golf clubs, clothing or personal electronics from your vehicle. Your home or tenant’s insurance usually covers these losses.
Check your home insurance policy to find out if it provides coverage for the theft of personal items from your vehicle.
Read your car insurance policy carefully. Always make sure you understand what it does and does not cover. Keep it in a safe and accessible place. Refer to it when needed.