Car Insurance: A Mandatory Protection for Drivers in Canada

Published: April 29, 2018

Updated: May 15, 2018

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The law requires every driver to have car insurance no matter where you are driving in Canada. This is compulsory in all territories and provinces. Your car must be protected by insurance with at least a minimum coverage. If you are found driving without insurance, you may be fined, your driver’s license may be suspended, and your vehicle may be towed and confiscated. Fines may range from $5,000 to $50,000.

If you get involved in an accident while driving without insurance, you may face some consequences that may include the following:

  • If there is a loss of life or injury and you are at fault, you may be liable for all medical costs, vehicle damages, and other losses.
  • You will not be entitled to get any compensation for damage to your vehicle, your own injuries, as well as other losses.
  • If other drivers are at fault, you may be prevented from filing a claim against them.
  • Your insurance firm may label you as a high risk driver and increase your quote if you are convicted of driving without insurance. They could also cancel your policy.

A number of factors which determine how much you will pay for insurance include:

New Drivers:

Individuals who are new to driving do not have a driving record and so are rated as higher risk by insurance firms. Insurance cost will be prohibitive until a good driving record has been established.

Driving Record:

Your insurance premium will be affected by your driving record. Insurers will consider the number of convictions you’ve had and how long you have been driving. Convictions may include car accidents, speeding tickets, and traffic violations such as running a red light. Your premiums will be lower if you have a clean driving record.

Type of Car:

Your premium will also be determined by the type of car you drive. Vehicles are classified according to their type (SUV, ATV, truck, sports car). Insurers consider the risk of vehicle collision history, theft, and injuries related with the type of car. Another factor when deciding rates is the mileage and age of the car.

Common discounts on insurance include: multi-vehicle discount, age discount, anti-theft device discount, multi-line discount, auto club membership discount, low mileage discount, and winter tire discount.

There are some features that can be added to an insurance policy. Two of the most important forms of insurance coverage include:

Collision Coverage: This covers for damage to your vehicle due to a collision with another vehicle or object.

Third Party Liability: This kind of insurance protects you if you are found legally liable when your car injures someone or damages their possession. Liability is compulsory in all territories and provinces in Canada.

There are limitations as to how much compensation you will get in some provinces. For example the maximum amount an individual can claim for pain and suffering in New Brunswick, Nova Scotia, and Prince Edward Island, is $2,500. This amount is different from what you will get as insurance coverage. Claims for pain and suffering are different from claims on medical expenses, property damage, or loss of income on employment.