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HomeCar Insurance ResourcesDo You Have to Buy Insurance Before Buying a Car?

No. This is the simple answer

In Ontario, you can purchase a vehicle from a dealership or through a private sale without having purchased car insurance. However, in order to drive the vehicle off the lot, or from the point of personal sale, it is the law that you must have car insurance. In Canada, in order to register a vehicle in your name, you must have car insurance in place. If you already have car insurance in place for your old vehicle some insurance companies allow the buyer a grace period to get everything in order. As soon as you sign the paperwork to purchase a new vehicle, your insurance company needs to be contacted.

Dealerships have a form letter that is to be sent to your insurance company outlining all the details pertaining to the new vehicle. The insurance company will then advise the dealership that your auto insurance coverage is in place. This must be done at the dealership as dealerships arrange for the registration of the vehicle with the government. 

Do you buy car Insurance Before or After Buying a Car?

buying car

Generally, you would purchase car insurance after you buy a car, as you have to provide your insurance company with the year, make, and model of the vehicle as well as the VIN. 

Can You Drive a Car Home After Purchase Without Insurance?

No, you cannot drive a vehicle in Canada without auto insurance. 

Is It Necessary To Buy Insurance From The Dealer?

No, you can purchase auto insurance from the company of your choice. 

Can You Purchase Car Insurance Without Owning a Car?

Yes, in Ontario you can purchase non-owner car insurance. 

What Is Non-Owner Car Insurance?

Auto Man Person

If you have an Ontario driver’s license, and you do not have a car but drive other owner’s vehicles, it may be a good idea to invest in non-owner car insurance. The reason is, even though you are typically covered under the vehicle owner’s policy should you get into an at-fault or partially at-fault accident and there is extensive damage, injuries, and even death, the owner’s policy may not have sufficient coverage. This would mean that you would be personally responsible for fees not covered. Obtaining a non-owner car insurance policy would increase the amount you are covered for.

Non-owner auto insurance is a liability-only coverage for those who are licensed but do not own a vehicle. Non-owner car insurance is also referred to as secondary coverage, as the owner of the vehicle’s policy would be used first to pay out for any damages or medical bills. If the owner’s policy isn’t enough coverage, then the non-owners’ auto insurance would come into play. 

Reasons You May Choose To Purchase Non-Owner Auto Insurance

Many people are not aware that this type of auto coverage is available as it is not frequently advertised by insurance providers. This is a type of liability insurance coverage that you would purchase if you frequently borrow a friend’s vehicle. If you often rent vehicles and you buy a non-owner vehicle auto policy online, you will be provided with a collision damage waiver, which is important as the waiver protects you from paying any physical damages.  Also when you purchase non-owner auto insurance provides insurers with information regarding your driving experience. This would protect your driver rating status.

Factors That Are Considered When Purchasing Non-Owner Auto Insurance

luxury car for sale

As with a vehicle owner’s auto insurance policy, there are certain factors that the insurer will take into consideration when they are determining your rate.  Some of these factors are:

  • Mileage you drive each month
  • Extent of coverage
  • The area where you live
  • Your past driving and insurance records

What Happens If You Drive Your Vehicle Without Auto Insurance?

In the province of Ontario, it is illegal to drive your vehicle without auto insurance coverage. If you are stopped by the Police in Ontario and are found without auto insurance you will be subject to fines and penalties. Ontario fines for driving without auto insurance are approximately $5,000 to $25,000 for your first offense and approximately $10,000 to $50,000 for a second offense. Along with these fines, the FSRAO will also add an additional 25% surcharge to your fine. Also in Ontario, your driver’s license is suspended for 30 days, and risk losing your driver’s license for a year. You also risk vehicle impoundment for 3 months. Ontario and Manitoba have the highest driving without auto insurance fees in Canada. In Saskatchewan, a second offense will cause your vehicle to be seized for 7 days. As driving with auto insurance in Ontario is not a criminal offense, you will not accumulate any demerit points. 

Keeping A Vehicle Without Auto Insurance

Fallen Tree Auto Forward

It is not against the law in Ontario to have a vehicle you are not currently driving without having auto insurance. However, keep in mind that it would be wise to purchase comprehensive auto insurance in the event your vehicle is vandalized, damaged from falling trees, or any other event that can happen to a parked vehicle. 

Take Away

The safest thing you can do when you are purchasing a new or used vehicle is to contact your insurance provider as soon as possible. You can obtain an insurance quote prior to purchasing the vehicle when you can provide your insurance company with the particulars they need to know about the vehicle. You can sign the purchase agreement to buy the vehicle, but legally you cannot drive it from the point of sale until you have auto insurance in place. In order for your vehicle to be registered with the government, you must show proof of auto insurance. New vehicles are typically registered with the government through the dealership and they will guide you through the process. Purchasing a vehicle through a private sale means a trip to a Service Ontario office to register the vehicle in your name. The previous owner must sign the back of the ownership of the vehicle in order for you to register it in your name.

One Comment

  1. Cheryl Helsby 27 March 2021 at 9:20 am - Reply

    I bought a used vehicle August 20th and picked it up September 9th, 2020 from a used vehicle dealership. I was never asked to sign the bill document. I was not given either the ownership paper nor the safety certificate. The bills of sale were not acceptable to the Service of Ontario when I did try to register it. To date the vehicle is still under the dealerships name. He had put his plates on the vehicle as he “forgot” to get me my 10 day permit when picking up the vehicle I had fully paid for. In November I drove to a store to stock up on water as my well had broken. Now charged with no insurance. The vehicle is insured under the dealers name. I need HELP!

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