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Types of Auto Insurance Coverages in Ontario

There are different types of auto insurance coverage throughout Canada. In the province of Ontario, it is mandatory that all drivers obtain auto insurance. The type of auto insurance you purchase depends on your individual needs and mandatory coverages. Some provinces in Canada have government-owned insurance providers, but in Ontario, you must purchase your auto insurance from a private insurance provider. It is very important that all drivers in Ontario obtain auto insurance prior to putting licence plates on a car, buy a temporary permit, or renew their vehicle registration. Those who drive without auto insurance coverage can be fined $5000 and up to $50,000 for repeat offences. Repeat offenders also face the possibility of having their driver’s licence suspended and/or their car impounded. Also if you are convicted of driving without auto insurance, you will have a very difficult time obtaining auto insurance as you would be considered a high-risk driver. 

Mandatory Car Insurance Coverage in The Province of Ontario

car insurance policy

In the province of Ontario, the law requires all drivers to have the following mandatory coverages:

  • Liability Coverage
  • Direct Compensation Coverage
  • Uninsured Automobile Coverage
  • Accident Benefits Coverage

This is the bare minimum coverage the province of Ontario requires all drivers to have included in their auto insurance policy. 

3rd Party Liability Coverage

3rd party liability coverage is mandatory as this type of coverage will cover costs involved when someone outside of your vehicle is either killed or injured. It also covers property damage as a result of your car accident. Liability coverages can be quite costly, for this reason, many drivers opt for $1 million or higher coverage. 

Direct Compensation Coverage

Direct compensation coverage is in place to cover any damage to your vehicle and its contents as a result of a car accident in which you are not at fault. 

Uninsured Automobile Coverage

Uninsured automobile coverage protects you and provides coverage in the event you are in an accident and the other party does not have auto insurance or leaves the scene of the accident. 

Accident Benefits Coverage

Accident benefits will cover your medical expense costs and any required ongoing treatment that you incurred as a result of a car accident. If you are unable to work due to injuries as a result of a car accident, accident benefits coverage will also provide you with income replacement. Some of this coverage may require you to increase the benefit amount that you pay. 

Special and Enhanced Auto Insurance Coverage in Ontario

insurance coverage

Car insurance offers different levels of protection, deductibles, and limitations in addition to mandatory coverage. Depending on your personal needs and the value of your vehicle you may want to include some other auto insurance coverage such as:

  • Specified Perils
  • Collision or Upset
  • Comprehensive
  • All Perils
  • Uninterrupted Driving Coverage
  • Accident Forgiveness
  • Total Replacement Value of Loss

Specified Perils

options

Specified perils coverage can protect your vehicle from losses such as floods, hail, fire, and theft. 

Collision or Upset

Collision or upset coverage includes damage incurred by your vehicle due to a collision with another vehicle or an object. 

Comprehensive

Comprehensive coverage includes all other insured damage to your vehicle aside from collision or upset. 

All Perils

All perils coverage is the widest level of coverage which includes and combines collision and upset, increased theft protection, and comprehensive coverage. 

Uninterrupted Driving Coverage

Uninterrupted driving coverage allows drivers to travel within Canada and the U.S. in a rental vehicle, towing, and a temporary rental car. Some conditions apply.

Accident Forgiveness

Accident forgiveness provides you with protection against your insurance premiums going up after an at-fault or partially at-fault accident. Some conditions apply. 

Total Replacement Value of Loss

mandatory insurance policy

Total replacement cost covers you for the full value of your vehicle should it be stolen or suffer extreme damage due to a car accident. Some conditions apply.

What Factors Influence Auto Insurance Rates?

Insurance providers base premiums on the risk you pose to the company and the probability you will make a claim. Therefore, there are several factors that insurance providers take into consideration to rate your level of risk to them. These factors include:

  • Your age
  • Your gender and marital status
  • Make and model of your car
  • Number of drivers in your household
  • Average mileage per year
  • Driving history
  • Auto insurance history
  • Geographical location

Your Age

Young drivers will pay more for car insurance than older seasoned drivers. As you get older your car insurance premiums may be less depending on other factors as well. Some are under the impression that car insurance automatically goes down when you turn 25. This is not necessarily true. 

Your Gender and Marital Status

As set out by the Financial Services Commission of Ontario, insurance providers are permitted to use the sex and marital status of a driver as variables when determining what their car insurance rate will be. Quite often insurance providers view married drivers as safer drivers. 

Make and Model of The Car You Drive

The make and model of the vehicle you drive is one of the biggest variables when an insurer is determining what your car insurance rate will be. Choosing a Toyota Corolla or a Mazda 3 could help to reduce the cost of your insurance premium. 

Number of Drivers in Your Household

Your car insurance premium can vary depending on the number of drivers in your household covered under your policy and their ages and driving records. 

Average Mileage Per Year

low mileage

Insurance providers also take into consideration your annual mileage. The higher your annual mileage, the higher the risk you are at becoming involved in an automobile accident. The less mileage the lower the risk.

Driving History

Your driving history directly affects your insurance premiums. This is why it is extremely important to maintain a clean driving record. Seasoned drivers will pay lower rates than new drivers. 

Auto Insurance History

Avoiding a lapse in auto insurance and ensuring you pay your premiums on time are other factors that insurers take into consideration when determining your insurance rate. 

Geographical Location

Where you live is also an important factor for insurance companies. If you live in a high crime area, or a heavily populated area where there is traffic congestion, your rates will be higher.

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