Car Insurance Canada

What is an auto insurance? Auto insurance (car insurance or motorcycle insurance) is insurance bought for cars, trucks, and other vehicles primarily used to give protection against losses occurred such as traffic accidents and against liability that could be occurred in the accident.

Auto insurance guarantees payment of expenses incurred when your vehicle is involved in accidents or is subjected to vandalism or theft. It also ensures you are able to cover the costs of potential damages or injuries.

With an auto insurance policy, you pay a premium, and in exchange, an insurance company pledges to pay for specific damages and injuries throughout the duration of the policy agreement.

Why is it required by law?

Canadians are required by law to have third-party liability car insurance. This covers damages and liability in case you injure or kill someone or damage someone’s property in a car accident. For instance, if you injured a pedestrian while running a red light, third-party liability coverage would pay the costs of the victim’s injuries. If you damaged the victim’s bicycle, it would pay for the bike’s repair. How much liability insurance you require depends on the province where you live.

Mandatory minimum liability insurance in Canada (except in Quebec) requires coverage for $200,000. In Quebec, the minimum liability requirement is $50,000.

Coverage levels

Auto insurance coverage include some or all of these items:
- The insured party
- The insured vehicle
- Third parties (car and people)
- Third party, fire and theft
- In some jurisdictions coverage for injuries to persons riding in the insured vehicle is also available without regard to fault in the auto accident (No Fault Auto Insurance)

An insurance policy is required by law to cover third-person liability. The minimum amount of liability insurance needed depends on the province where you live. In Manitoba and Saskatchewan, it is also compulsory to have physical damage coverage, which covers damage incurred to your own vehicle.

As noted, mandatory minimum liability insurance required in Quebec is $50,000. Elsewhere in Canada, you must be covered for $200,000.

But if a person files a claim for bodily injury and property damage and that claim reaches or exceeds the limit of your policy’s liability, payment for property damage would be limited. That limit is $20,000 in Newfoundland, New Brunswick and the Yukon. Elsewhere, except Quebec, the property damage would be limited to $10,000.

Different policies specify the circumstances under which each item is covered. For example, a vehicle can be insured against theft, fire damage, or accident damage independently.

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