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Car Insurance in Canada

Updated: June 8th, 2023

Wherever you reside in Canada; you must have auto insurance. Although every province and territory determines unique required minimum insurance coverages, you can find many similarities in Canadian car insurance, including the average cost of car insurance in Canada.

Car insurance companies in Canada greatly emphasize your driving record. Your driving record will affect your car insurance premium. Your premium will be lower if you have a clean driving record than if you have experienced a conviction or accident.

How much is car insurance in Canada? That depends on the kind of car you drive. Factors such as stealing rates, historical repair costs, and vehicle safety ratings vary significantly and affect insurance prices from the highest to the cheapest car insurance in Canada.

How frequently and far you drive also determines the car insurance rate. if you work from home or close to home, the average cost of car insurance in Canada for you will be much lower.

Auto Insurance in Canada

auto insurance in canada

Auto Insurance in Canada is necessary for individuals that legally own and actively drive a car in Canada. Many newcomers arrive in Canada filled with questions like which are the best car insurance companies in Canada? How much is car insurance in Canada? What is the average cost of car insurance in Canada?

To answer these questions, here is what you must know to get started on your Canadian car insurance application.

Why do You Need Car Insurance in Canada?

Car insurance is necessary if you own a car or other vehicles in Canada.

Car insurance protects you when:

  • You have to pay repair fees for your car or another vehicle if it's damaged or was in an accident
  • You are liable to pay liability claims if you’re responsible for an accident that caused damage, harm, or injury to someone else’s vehicle or passenger/s.​

Who is Covered by Car Insurance in Canada?

If you were in a car crash, Canadian car insurance covers the:

  • ​Driver
  • Passengers
  • Other people who were involved in the accident i.e pedestrians etc.

Injured passengers or people involved in the accident in some Canadian provinces which have their insurance policy can claim under a policy they’re insured under. Principal drivers are defined as those driving the car.

Additional drivers must be listed in your policy. Listed additional drivers with poor driving records will increase your premiums.

What Does Car Insurance in Canada Cover?

The maximum amount of money the insurance company will pay you for an insurance claim is called coverage.

Mandatory Insurance Coverage

Provinces and territories in Canada need drivers to have mandatory coverage. Some provinces require coverage more than others.

Liability Insurance

Liability insurance covers losses, injury or death, or harm your vehicle causes to other people. Liability insurance does not cover repair costs to your vehicle. Consider additional insurance to cover vehicle repair costs.

Accident Benefits/Bodily injury insurance

Accident benefits cover medical expenses and loss of income if you’re in a car accident. Quebec automatically enrolls you for insurance coverage.

Additional Insurance Coverage

Additional benefits may come with your insurance policy.

Collision Insurance

Collision insurance covers repair or replacement costs to your car in case of an accident. Sometimes this is included with your mandatory insurance coverage.

Ask your insurance company what coverage is included in your insurance policy.

Comprehensive Insurance

Comprehensive insurance covers repair or replacement costs to your car. This includes

  • Vandalism
  • Windshield damag
  • Theft

Comprehensive insurance does not cover loss or damage to your car in the event of a collision.

Optional Insurance Coverage

You may be deemed ineligible for all types of optional insurance depending on your insurance policy. If so, we recommend you buy extra insurance to cover risks not included in your basic policy.

You must consider additional insurance coverage for:

  • Using alternate transportation or renting a vehicle while your car is being repaired
  • Repairs to rental car damage
  • Roadside assistance for emergencies
  • Car depreciation ensuring you receive the full value for the payment of your car

Here are some tips to get the best out of your optional insurance.

  • Ask your insurance company which risks requiring extra coverage.
  • Please note that car insurance in Canada does not cover the loss of personal possessions. Home or tenant’s insurance generally covers this.
  • Find out if your home insurance policy covers the theft of personal possessions from your vehicle.
  • Read your car insurance policy carefully and ensure you understand the coverage provided.

Find out more about how to get a Canadian insurance policy.

What are the Alternative Options For Car Insurance in Canada?

Consider Collision Insurance or Comprehensive Insurance if you’re planning to settle in Canada permanently.

In the event of a vehicle accident, collision insurance covers you for:

  • Vehicle repairs
  • Vehicle Replacement
  • Comprehensive Insurance coverage to your damaged car

Comprehensive Insurance covers you in the case of damage due to:

  • Fire
  • Vandalism
  • Theft

Comprehensive Insurance will not cover damage to your car if it was involved in an accident with another vehicle. The theft of personal items in your vehicle is usually not covered by car insurance plans.

How do Insurance Companies in Canada Calculate Premiums?

When determining premiums amounts, insurance companies consider factors such as your:

  • Age
  • Gender
  • Place of residence
  • Personal car
  • Frequency of car usage
  • Driving Record
  • Claim history
  • Chosen care
  • Deductible amount

Deductibles are the claims amounts you agree to pay before your insurance company agrees to pay the rest.

Shopping Around for Low Insurance Premiums.

Premiums vary between insurance companies. We recommend shopping around, asking for quotes, and comparing prices before deciding on an insurance company. You may be eligible for a discount in certain cases when you combine your home and car insurance.

Insurance companies give ratings to the claims made on car makes and models. Cars with better ratings generally have the cheapest car insurance in Canada. Rating information can be received from:

In most provinces and territories, an insurance company can charge higher premiums based on your credit rating.

Learn more about how your credit rating may affect your premiums on the Canadian government website when shopping around for insurance.

What Can You Do if Your Car Insurance Premiums Increase?

Your car insurance premiums may increase in certain cases. If that is the case, you can consider asking about these options for lowering your car insurance premiums:

  • Deductibles raise
  • If your car has a low resale value, drop coverage for collisions
  • Package deals for home and car insurance with the same insurance company

Ensure you get quotes, shop around, and compare prices from different companies to make sure you're getting the best deal.

Where Can You Apply For Car Insurance in Canada?

Where can you apply for car insurance in canada?

Understanding where you can apply for car insurance is vitally important for starting your journey to receiving Canadian car insurance.

Buying insurance requires you to apply for it and meet specific conditions for approval.

You can buy insurance from:

  • Licensed insurance agents
  • Registered insurance brokers
  • Insurance companies
  • Lenders when you make a loan application

You can buy insurance:

  • With a cellphone
  • Online
  • Face to face/over the counter

What are the Best Car Insurance Companies in Canada?

The best car insurance companies in Canada according to are:

How Can I Choose the Right Insurance Policy For Me?

You must choose an insurance company with a federal, territorial, or provincial license to ensure you have:

  • Access to complaints-handling process when filing a complaint
  • Protection in case your insurance company fails

If your insurance company fails, the Property and Casualty Insurance Compensation Corporation (PACICC) will protect your home and car insurance benefits.

How Can You Settle a Claim if You Have a Car Loan?

how can you settle a claim if you have a car loasn?

Your car insurance policy will include a loss payee clause if you have a car loan. A loss payee clause makes your lender your beneficiary. If your car is damaged, claim to ensure your insurance company pays your lender (your beneficiary) the balance of your remaining car loan.

Settlement Options For Car Insurance in Canada

If you have a car loan, your car insurance policy will usually include a loss payee clause. A loss payee clause makes your lender your beneficiary. In case of loss or damage to your car, your insurance company will pay your lender (your beneficiary) up to the remaining balance of your car loan when you make a claim.

When you make a claim, your insurance company may, at its discretion, give the money to either:

  • You, so you can fix your car when you submit a claim
  • Your lender, who would then give you the money for repairs after you submit receipts proving they were done

Get guidance on all the processes involved in receiving Canadian car insurance by consulting one of our Regulated Canadian Immigration Consultants (RCICs).


What is The Average Cost of Car Insurance in Canada?

According to Canada Drives, the average cost of car insurance in Canada is higher in the western Atlantic provinces, averaging at approximately 2 404,10 CAD. Learn more about the average cost of insurance per Canadian province as per data from

Does Foreign Car Insurance Work in Canada?

Car insurance policies in Canada generally follow you no matter where you travel within Canada or the U.S. Therefore you don’t must purchase extra coverage from your insurance provider if you live and travel either in the US or Canada. Outside these two countries, you must purchase Canadian car insurance to drive in Canada.

Can I Insure a Car Not in My Name in Canada?

If you're driving a car in Canada not registered under your name because it belongs to a friend or family member, you must ensure that your name is registered in the car insurance policy contracted by the owner of the car i.e. relative or friend.

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