Canadians are legally required to have automobile insurance on their vehicles. Auto insurance is regulated by the provincial governments and these regulations are different in each one. It is mandatory to hold insurance from an insurance company in the province in which you reside. You must know what is mandatory in your province and what coverage you may want to add.
How Auto Insurance Works
The purpose of auto insurance is to cover the unpredictable loss in the event that you are involved in an automobile incident. Billions of dollars are paid out every year to cover the cost of auto insurance claims in Canada alone. Insurance companies are closely audited to ensure they can cover these costs in the event that the worst does happen.
The federal government via the Office of the Superintendant of Financial Institutions (OSFI) requires insurance companies to have a certain amount of capital on hand to cover every policy they sell. The insurance company must prove that it can cover every potential claim they sell.
Auto Insurance Risk and Auto Insurance Rules Vary by Province
Assessing Risk, determining prices and even how insurance companies may handle claims. A provincial agency within each province regulates the auto insurance industry. Each of these provincial agencies determines which factors can and cannot be used by insurers to set auto insurance rates and how they may be used. Factors including a driver’s age or gender may be used in one province but not in others. All insurers must have their systems for classifying risk assessed and approved by the provincial regulatory agency any time they wish to change insurance rates.
Because each province has its own regulatory agency and set of standards and rules, auto insurance differs greatly from one province to the next. The provincial government can play a major role in determining the level of legal benefits an injured party may receive through auto insurance claims, but also what insurance they may purchase outside of the insurance contract. In one province you may be able to sue for pain and suffering and economic loss beyond their insurance benefits but in another province, they may not or it may be limited or capped at a certain amount. The government also regulates the wording in the industry to ensure it is standardized, that the same terminology is used throughout the insurance agencies within the province.
Out of Province Car Insurance
If you are moving from one province to another with your vehicle, the provincial government generally gives you 90 days to switch your license and insurance as well as the plates on your car. You will require your driver’s license, the complete used vehicle information package, proof of purchase, proof of insurance from a licensed insurer inside the province, original transfer of sale permit, the plate portion of the permit.