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What is Car Insurance? Covers and Costs

Personal auto or car insurance for private-passenger vehicles is mandatory to drive in every province legally.

What is Car Insurance

What is Car Insurance?

Car insurance, auto insurance, or vehicle insurance is an insurance policy that covers a wide range of personal vehicles, including automobiles, vans, SUVs, pickup trucks, motorbikes, and other road vehicles.

Car insurance protects you financially against physical damage or bodily injury caused by an accident or collision, as well as the liability you may face as a result of occurrences that occur while driving a car, whether you own it or not.

It protects you from having to pay to repair your vehicle or the vehicle of another motorist if it is damaged in an accident. It also protects you if you are at fault for a collision that damages another person's vehicle or property, or if the incident injures them.

What Car Insurance Does it Cover?

Depending on your province, you must have several forms of necessary car insurance coverages and coverage limitations. The following are the most typical types of mandatory coverages found in a car insurance policy:

Liability to Third Parties

Third-party liability protects you financially if you are involved in an accident, injure someone else, and are found to be at blame for the mishap. You could face legal consequences if you injure or kill someone, or cause damage to another person's property or vehicle. 

It will also cover your legal fees if you are sued by one of your passengers or another driver who was involved in an accident while you were driving.

Bodily injury coverage pays for the medical expenditures of other people harmed in an accident, including lost income if their injuries are serious and they are unable to return to work.

Property damage coverage compensates you for damages caused by your car to someone else's property, such as vehicles, residences, and other structures.

Benefits From an Accident

Accident benefits cover the cost of injuries sustained by you or any passengers in your vehicle in the event of a collision, regardless of who is at fault. 

It compensates for lost income, pays for medical or other expenditures, and may provide a death benefit to loved ones if the unthinkable occurs.

Uninsured Vehicle or Driver

If you or a member of your family is injured or killed in a car accident caused by another driver who is not insured, uninsured auto coverage can assist pay for vehicle damages. It also covers your medical bills, lost wages, and other expenditures incurred as a result of the accident. 

Some provinces, including British Columbia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island, do not need uninsured motorist coverage.

Property Damage Direct Compensation

The term DC-PD refers to how your claims are paid. In Ontario, for example, you are reimbursed directly by your insurer because DC-PD is part of the province's no-fault insurance system. 

Not all provinces work the same way. Nonetheless, this form of coverage assists in the repair or replacement of your car (and its related items, such as your vehicle's infotainment system) if you are not at fault in an accident. 

The goal of DC-PD coverage is to ensure that your accident claim is processed swiftly by your insurance carrier rather than having to wait for the insurer of another driver to complete its investigation of a crash.

What is the Cost of Car Insurance?

The cost of an annual car insurance policy in Canada varies by insurance provider and is decided by your province's car insurance regulator. Some provinces, such as British Columbia, Manitoba, and Saskatchewan, have public auto insurance systems.

Private auto insurance is available in several provinces, including Ontario, Alberta, and Nova Scotia.

Among the factors considered by insurers when deciding your rate are:

  • Your gender and age
  • If you are under the age of 25, please include your marital status.
  • Your credit rating (not applicable in some provinces)
  • Where you live
  • Your driving history and experience
  • What kind of vehicle do you drive
  • How many kilometers do you drive each year?
  • Your car insurance history

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