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Do I need to get auto insurance to drive in Ontario?

If you drive a car, you must have auto insurance. Driving without insurance is illegal and can cost you hefty fines and even a suspension of your driver’s license. 

Auto insurance is financial protection that covers you in an accident or other incidents involving your car. Understanding your auto insurance can be confusing, especially if you are a new driver or new to Canada.

Here are a few key things you need to know about getting auto insurance.

Mandatory Basic Coverage

Basic auto insurance coverage protects you and others from injury caused by a car accident. It also covers damage to a third party’s property. According to the Insurance Bureau of Canada, the minimum mandatory car insurance coverage you will need in Ontario is:

• Third-Party Liability covers damages or injuries you cause to other people and their property if you are at fault in an accident. The minimum liability coverage required varies by province but is typically $200,000 or more.
• Accident Benefits, and Uninsured Automobile provides medical benefits if you are injured in a car accident, regardless of who caused the accident. This coverage includes medical, rehabilitation, attendant care, caregiver, non-earner and income replacement benefits.
• Direct Compensation Property Damage (DCPD) covers damage to your vehicle and the contents or the loss of your car in an accident where another person is at fault.

*Note: Effective January 1, 2024, the government of Ontario introduced a new option for consumers to remove the DCPD coverage from insurance plans to save on insurance costs. 

Removing DCPD coverage from your plan can save you money initially, but beware that if you have an accident, you'll be responsible for all costs where someone else is at fault.

Optional Coverage

In addition to the mandatory coverage, you can also purchase optional coverage or “endorsements.” Some of the more popular ones are: 

• Rented or Leased Vehicles - this coverage is for when you are driving rental cars.
• Transportation Replacement or “Loss of Use” - covers the cost of a replacement rental car while you repair your car from damage or loss.
• Family Protection Coverage - protects you, or a family member, to the same limits as your third-party liability coverage if you’re in an accident (that is not your fault) with someone who carries less or no insurance or a “hit and run.” 

These are only some of the additional endorsements available you can add to your policy coverage. Ask your broker, agent, or insurance company as many questions as you need to understand what all the coverages mean. Explore with them which coverage is best suited for your needs. 

Rates and Pricing

The average rate or “premium” in Ontario is estimated at around $1796 per year. Most insurance companies in Canada don't recognize your driving history and insurance experience from other countries, which can result in higher premiums. Auto insurance rates are determined by a variety of factors, including:

• your driving and insurance record and history and those listed in the policy in your household
• the model, make and age of your car and safety features 
• where you live
• your driver’s license class
• personal information like your age, gender and marital status
• how often do you drive your car 
• if you drive your vehicle for commercial purposes
• market conditions (an increase in auto thefts can drive premiums up)

Generally, younger and new drivers, as well as drivers with tickets or accidents, will pay higher insurance rates. Drivers with a good record and more experience will usually get better rates.

Rates can vary between insurance providers and based on different factors, so it's important to shop around and compare quotes. Check out the “tips to save on auto insurance” from the Financial Services Regulatory Authority of Ontario for ways to save. Remember, maintaining a clean driving record and avoiding claims is the best way to lower your rates over time.

Filing a Claim

If you are involved in an accident, you will need to file a claim with your insurance company. They will review the damage and determine if it’s covered under your policy. You may need to pay a deductible (the amount you agree to pay upfront for the damages before the insurance pays). Deductibles can run between $500-$1000

For More Information

• How to file an auto insurance claim - This resource covers all the steps you will need to take to file a claim with your insurance. From the Insurance Bureau of Canada (IBC).
• Vehicle insurance and registration - Information if you are new to Ontario on insurance and registering your vehicle. From the Ministry of Transportation.