What auto insurance coverage is mandatory in Ontario?

Ontario has an established car culture, to say the least. According to Statistics Canada, there were more than eight million registrations for private passenger vehicles in 2017. If you’re looking to become one of the millions of Ontarians that own a car, there are a few things you need to know before you can join their ranks — namely, the kind of insurance coverage you’re required to have.

Here’s what you need to know about how car insurance works in Canada’s most populous province.

Car insurance is mandatory in Ontario

You must have auto insurance in Ontario — full stop. It’s illegal to own and operate a car without it, says Pete Karageorgos, Ontario director of consumer and industry relations with the Insurance Bureau of Canada (IBC).

All drivers need to have the following coverages on their insurance policy:

Third-party liability coverage of a minimum of $200,000

This covers the expenses that occur if a third party is injured or killed in a car accident that involves you. It also covers property damage. While $200,000 is the minimum, Karageorgos says people often carry more, often up to one or two million dollars.

“Think about it — if you injure or kill someone or if you destroy someone's property and they sue you, it's easier to pay,” he says.

“If we were all walking around with $200,000 minimum limits and, for example, [you got sued] and the judgment was for half a million dollars, you're on the hook for that extra $300,000 because you've only got $200,000 worth of coverage. That's why it makes sense to at least have a million.”

Statutory accident benefits coverage

This type of coverage will provide you with benefits if you were injured in an accident — even if you were at fault.

“I like to call this injury coverage,” says Karageorgos. “This is the coverage that's going to help pay for those medical bills above and beyond any hospital room visits. It may also cover things such as additional physiotherapy or chiropractic therapies and it may also provide you coverage for attended care. Finally, this coverage also covers your income replacement.”

Direct compensation, property damage coverage, and uninsured automobile coverage

Direct compensation covers the damage made to your vehicle and any possessions inside if you’re involved in an accident where someone else is at fault. Uninsured automobile coverage, as the name suggests, helps pay for expenses if you’re injured or killed by a vehicle that is uninsured or flees the scene. It will also cover damages to the vehicle and its contents.

That’s it for mandatory coverage, but there’s a long list of optional coverages you can add to your policy, including collision coverage, car rental insurance, and coverage against depreciation (which, in the event of a total loss, obliges your insurer to pay you the original sale price).

How much should you pay for your deductible?  

Next, let’s tackle your deductible. This is the consumer's share of the claim and what you pay first before the insurance company pays the difference. How much should you pay for your deductible and does it make a difference if you go for the more expensive option?

Like many insurance questions, it depends on your personal and financial circumstances, says Karageorgos.

“Deductibles do make a bit of difference, [but] it varies. I was surprised a few years back when I had an older vehicle… and I decided to take collision coverage off because I knew that if it was involved in a crash it would be a write-off,” he says.

“It wasn't worth much anyway, but I was so surprised at how little I saved.”

The best thing to do when figuring out how high your deductible and insurance premium should be is to shop around and get quotes. Generally speaking, your insurer will offer you a lower premium if you offer to cover a large share of the claims cost out-of-pocket — but your deductible amount should be a sum you could afford to pay.

Of course, even after you’ve signed on the dotted line it’s always good to do regular check-ups. Karageorgos says that car owners should check on their policy at least once a year if nothing has changed and update it every time there’s a major life change.

That change might be a new job that requires you to have a car, or it might be that you moved. Insurance rates differ by region and you could end up with a cheaper rate if you move to an area with a better (i.e., lower) claims history.

Ultimately, Karageorgos says, you don’t want to be involved in an accident only to find you don’t have adequate insurance. You may not like paying premiums — but you’ll be glad it’s there if you ever need it.