There is definitely a lot of disparity when it comes to car insurance prices in US and Canada. The factors that insurance companies use in both countries vary and could be the reason behind their rate calculation. Both neighboring countries do require mandatory car insurance and liability coverage. There are major private insurers in both countries and some sell in both. If you have a policy with such a company then you may stay with the same insurer when you move. However, you may pay a higher price for car insurance in Canada than in the US. In both places, your driver record along with vehicle profile and location will affect your rates. If your driver record has many violations, at-fault accidents etc. then it could increase your rates, be it in Canada or US.
Surprisingly certain states in the US do not need you to carry car insurance by law. However, you have to provide proof of financial responsibility such as a cash deposit with the transportation department, file a surety bond or self-insurance with that state. This will pay for the damages when you are in a collision.
How Does Car Insurance Work In US?
In US car insurance protects passengers and drivers against financial losses in a collision. Though most states have made car insurance mandatory, the amount of coverage required may vary for each state. Liability coverage is part of mandatory car insurance and offers you protection from expenses for property damage, injuries etc. Some states follow the no-fault system for auto insurance. These include Michigan, Massachusetts, New Jersey, New York, Utah, North Dakota, Hawaii, Kansas, Kentucky, Pennsylvania, Minnesota and Florida. Also, no-fault insurance type differs in each state and some may require that you have Personal Injury Protection. In 3 states you may choose to either have no-fault insurance coverage or the tort coverage. These are the states of Kentucky, Pennsylvania, and New Jersey.
What Is Included In Car Liability Coverage In US?
Most insurance policies have 3 main components for auto liability coverage. These include bodily injury coverage per person, per accident and property damage per accident. Usually, there are limits for each of these components and it will specify on your policy; an example would be 10/25/15. This means that when you are in a collision with another vehicle that injures many passengers then your liability coverage would pay for up to $10000 per person for bodily injuries. But this amount cannot exceed $25000 for total injury claim for the incident. And you may claim up to $15000 for property damage due to the collision.
How Does Car Insurance Work In Canada?
All motorists need to have car insurance with mandatory coverage to operate a vehicle in Canada by law. The car insurance policy offers protection to the driver, owner, pedestrians, passengers and the third party injured in a collision as well as property damage. Your insurance contract outlines your coverage limits, perils, exclusions etc. and you pay premiums either monthly or annually.
Difference Between Canadian And US Car Insurance?
Almost all Canadian provinces have a no-fault insurance system whereas only 12 states in the US follow no-fault insurance system. Out of those 12, there are three states that have a choice between tort and no-fault insurance system.
In certain Canadian provinces, the government pays for injury claims and not the insurance company; an example is Quebec.
It is mandatory to have only Liability coverage in the US whereas in Canada you must carry more coverage. If you finance or lease your car in the US your lender may ask you to buy full coverage. This will include collision and comprehensive too. In Canada, mandatory coverage must include accident benefits, uninsured motorist benefits and DC-PD (Direct Compensation Property Damage).
There are only private insurance companies in the US and no state program for car insurance. In Canada, certain provinces do have government insurance programs as well as private insurers.
Why Does Car Insurance Cost More In Canada Than In The U.S?
It is true that car insurance may cost more in Canada than in the US and particularly the cost of auto insurance in Ontario is most expensive. The coverage limit and options do vary with each state and you only need liability insurance as mandatory. However, in Canada, you need to purchase more coverage such as uninsured benefits, DC-PD and accident benefits as mandatory. This could be a major reason for the price difference. In the US, payout limits are less than Canada and the coverage is optional. In Canada, you pay more but you also get more protection. Also, as per the city you live in, the theft rating and traffic congestion, daily commuting distance, rates could differ.