Ontario’s climate is one of extremes, depending on both where — and when — you are in the province. From the heat of summer to the cold depths of winter, one thing remains constant. Your car requires minimum levels of auto insurance protection to drive legally.

Auto Insurance in Ontario

Ontario’s car insurance system is a mix of tort and no fault principles. In a market highly regulated as well as independently served, insurers compete for business, yet the competitive market is the most expensive in Canada. It seems that auto insurance stirs up as much as the weather.

The provincial government requires a minimum level of car insurance coverage, referred to as the statutory auto insurance policy. It covers four main areas:

  • Third party liability insurance — a minimum of $200,000 of liability coverage protects others against accidents that are the insured driver’s fault.
  • Accident benefit coverage — funds paid by the driver’s own insurance company for health and rehabilitation costs, regardless of fault.
  • Direct compensation-property damage — again, paid by the driver’s own insurer when accidents meet certain conditions, regardless of fault.
  • Uninsured/underinsured motorist protection — in cases such as hit and run accidents or when the other driver operates a car illegally, without insurance, this portion protects the driver and occupants against loss and injury.

Both the liability and accident benefit portions have top-up coverage available. In both cases, statutory benefits may be inadequate to fully protect a driver. Insurance companies sell additional protection for nominal fees. For example, most drivers in Ontario choose a level of $1 million in liability protection to cover against settlements arising from serious accidents.

Consequences for Driving Without Insurance in Ontario

Valid auto insurance must cover a vehicle using public roads in Ontario. Insurance companies issue pink forms intended to accompany the vehicle at all times. Car insurance usually covers only a single vehicle. The pink slip describes the vehicle’s make, year and model as well as including the unique VIN number for that car. A driver must produce this slip when requested by police. Failure to do so may earn a ticket, even if proper insurance is in place.

Driving without insurance is serious business. Both the driver of a vehicle and the owner (if they are different people) are liable when there is no insurance coverage. Fines range from $5,000 to $50,000 upon conviction. As well, drivers could face suspensions and vehicle impoundment.

Worse still, obtaining insurance in the future becomes difficult as the driver or owner is now assessed as a high risk client for insurance purposes. This is the same as if having a drinking and driving conviction. If a regular insurance company doesn’t offer a policy, that driver is forced to seek coverage through the Facility Association. Policies arranged through this insurance industry group can top $10,000 for the highest risk drivers.

Car Insurance Terms in Ontario

terms document

Unlike British Columbia, for example, that has a temporary insurance product to ease the pressure when purchasing a car, Ontario insurers offer only 6 month and one year term policies. Even then, not all insurers offer 6 month products. While a six month term may apply to a vehicle driven seasonally, the winter weather months typically extend from November to March. In the southern part of the province, snow could be a factor for only three or four months in total. Insuring a car for six months and storing it for six months greatly reduces a vehicle’s utility. In addition, a vehicle is not immune to damage and loss while off the road.

Auto Insurance as Part of the Registration and Licensing Process

Obtaining auto insurance is the first step in Ontario’s vehicle registration process. It is up to the driver to arrange coverage prior to the actual sale of the vehicle. As long as the driver has all the necessary information about a vehicle, an insurance company issues a policy even before that driver pays for the vehicle.

Upon payment, the next step is registration and licensing. Usually conducted at ServiceOntario centres, the transaction accepts proof of insurance, details of the sale and the previous vehicle registration certificate. New ownership paperwork and license plates, if necessary, is purchased at this time.

Modifying Auto Insurance for Seasonally Driven Vehicles

One right that auto insurance consumers have is the ability to change or cancel their policy at any time.

While selective cancellation may be used to cover a vehicle only during the months it’s on the road, there are two major shortcomings to this idea. First, the car is completely unprotected during that time off the road. Should it be destroyed in a garage fire, the owner is on the hook for the loss. The same applies with theft or weather damage.

The second drawback is that the insurance company likely charges a prorated administrative fee for the unused portion of the policy’s term. While any prepaid premiums return to the driver, they still must pay the fee for the cancelled period.

The best solution to cover a car during storage periods is through modification of an existing policy. For the period of storage, a driver might choose some or all of the following strategies:

  • Changing liability and accident benefit coverage to minimum levels
  • Raising deductible amounts to the highest possible level
  • Dropping collision coverage altogether, since the vehicle is not driven
  • Removing optional coverage and endorsements
  • Removing other drivers listed as occasional users
  • Informing the insurance company the vehicle is in storage and revising annual mileage expectations

With minimum insurance in place, the car remains street legal for emergency use, though of course changes to coverage take effect should there be an incident. Another possible complication arises if the insurer believes the car is completely off the road, yet has a collision. Any time a driver misleads an insurance company, benefits could be denied, so the wise driver adds, “except for emergency use” when contacting their insurer.