In Canada, there are several types of auto insurance coverages that drivers can choose from, including:
- Third-party liability coverage
- Accident benefits coverage
- Uninsured/Underinsured motorist coverage
- Comprehensive coverage
- Collision coverage
- All Perils coverage
- Direct compensation-property damage (DCPD) coverage
Insurance providers in Canada typically offer a range of coverage options, so drivers can choose the coverage that best meets their needs. Additionally, drivers can often customize their coverage by choosing higher or lower coverage limits and adding or excluding certain coverages.
Third-party liability coverage
Third-party liability coverage is a type of auto insurance coverage required by law in Canada. This coverage provides protection in the event that you’re at fault in an accident and cause damage or injury to another person or their property.
Third-party liability coverage pays for the costs of repairing or replacing the other driver’s vehicle, as well as covering any medical expenses and other damages incurred by the other party as a result of the accident. This coverage also provides protection for any legal fees that may be incurred in the event of a lawsuit.
The minimum level of third-party liability coverage required by law in Canada varies by province, but typically ranges from $200,000 to $1 million. However, it’s important to keep in mind that these minimum limits may not be sufficient to cover the costs of a serious accident, so many drivers choose to purchase higher limits of coverage to provide greater protection.
Accident benefits coverage
Accident benefits coverage is a type of auto insurance coverage offered in Canada. This coverage provides benefits to you or your passengers if you’re injured in a car accident, regardless of who was at fault.
Accident benefits coverage typically includes a range of benefits, such as medical and rehabilitation expenses, income replacement, death benefits, and more. This coverage can provide financial assistance for expenses related to medical treatment, rehabilitation, and recovery from injuries sustained in a car accident. It can also provide income replacement benefits if you’re unable to work as a result of your injuries.
The amount of coverage and specific benefits included in an accident benefits policy can vary by insurance provider and policy type. Some insurance providers offer accident benefits coverage as a standard part of their policies, while others may offer it as an optional coverage that drivers can choose to add to their policy.
It’s important to note that while accident benefits coverage is separate from third-party liability coverage, they both work together to provide comprehensive protection in the event of a car accident. Accident benefits coverage provides financial assistance for injuries sustained by you or your passengers, while third-party liability coverage provides protection for damages or injuries that you cause to another party.
Uninsured/Underinsured motorist coverage
Uninsured/underinsured motorist coverage is a type of auto insurance coverage offered in Canada. This coverage provides protection in the event that you’re involved in an accident with a driver who does not have adequate insurance coverage to pay for damages or injuries that they cause.
Uninsured motorist coverage provides protection if the other driver involved in the accident does not have insurance. Underinsured motorist coverage provides protection if the other driver has insurance, but their coverage limits are not high enough to fully cover the costs of the damages or injuries they cause.
This type of coverage can provide financial assistance for repairs to your vehicle, medical expenses, and other damages incurred as a result of the accident. The specific coverage and limits of uninsured/underinsured motorist coverage can vary by insurance provider and policy type.
It’s important to keep in mind that while uninsured/underinsured motorist coverage can provide important protection in the event of an accident with an uninsured or underinsured driver, it may not be required by law in all provinces in Canada. However, it’s still worth considering as part of your overall auto insurance coverage, as it can provide added peace of mind and protection in the event of an accident.
Comprehensive coverage
Comprehensive coverage is a type of auto insurance coverage offered in Canada. This coverage provides protection for damages to your vehicle that are caused by events other than a collision with another vehicle, such as theft, vandalism, natural disasters, and more.
Comprehensive coverage can help cover the cost of repairs to your vehicle or, if your vehicle is declared a total loss, pay for a replacement vehicle. This type of coverage is typically optional and can be added to your auto insurance policy.
Examples of events covered by comprehensive coverage include theft, fire, flood, hail, windstorm, and falling objects. Comprehensive coverage can also provide protection for damages to your vehicle from non-collision events such as vandalism or rioting.
The specific coverage and limits of comprehensive coverage can vary by insurance provider and policy type. Some insurance providers may also offer additional options, such as glass coverage or coverage for damage caused by wildlife, as part of their comprehensive coverage.
It’s important to keep in mind that while comprehensive coverage can provide valuable protection for your vehicle, it may not be required by law in all provinces in Canada. However, if your vehicle has a loan or lease, the lender or leasing company may require that you have comprehensive coverage as a condition of the loan or lease agreement.
Collision coverage
Collision coverage is a type of auto insurance coverage offered in Canada. This coverage provides protection for damages to your vehicle in the event of a collision with another vehicle or object, regardless of who is at fault.
Collision coverage can help cover the cost of repairs to your vehicle or, if your vehicle is declared a total loss, pay for a replacement vehicle. This type of coverage is typically optional and can be added to your auto insurance policy.
Examples of events covered by collision coverage include a collision with another vehicle, hitting a pothole or curb, or flipping your vehicle. Collision coverage can also provide protection for damages to your vehicle from a single-vehicle accident, such as a collision with a tree or guardrail.
The specific coverage and limits of collision coverage can vary by insurance provider and policy type. Some insurance providers may also offer additional options, such as rental car coverage or coverage for towing and storage, as part of their collision coverage.
It’s important to keep in mind that while collision coverage can provide valuable protection for your vehicle, it may not be required by law in all provinces in Canada. However, if your vehicle has a loan or lease, the lender or leasing company may require that you have collision coverage as a condition of the loan or lease agreement.
All Perils coverage
All Perils coverage is a type of auto insurance coverage offered in Canada. It is also known as “broad coverage” and is considered a more comprehensive form of coverage compared to other types of auto insurance, as it combines both collision coverage and comprehensive coverage.
All Perils coverage provides protection for damages to your vehicle in the event of a collision with another vehicle or object, as well as non-collision events such as theft, fire, flood, hail, windstorm, and more.
All Perils coverage can help cover the cost of repairs to your vehicle or, if your vehicle is declared a total loss, pay for a replacement vehicle. This type of coverage is typically optional and can be added to your auto insurance policy.
The specific coverage and limits of All Perils coverage can vary by insurance provider and policy type. Some insurance providers may also offer additional options, such as rental car coverage or coverage for towing and storage, as part of their All Perils coverage.
It’s important to keep in mind that while All Perils coverage can provide valuable protection for your vehicle, it may not be required by law in all provinces in Canada. However, if your vehicle has a loan or lease, the lender or leasing company may require that you have All Perils coverage as a condition of the loan or lease agreement.
Direct compensation-property damage (DCPD)
Direct Compensation-Property Damage (DCPD) coverage is a type of auto insurance coverage offered in Canada. It is also known as “no-fault coverage” and is designed to provide compensation for damages to your vehicle in the event of an accident, regardless of who is at fault.
DCPD coverage provides protection for damages to your vehicle that are caused by another vehicle, such as in a collision. This type of coverage can help cover the cost of repairs to your vehicle or, if your vehicle is declared a total loss, pay for a replacement vehicle.
DCPD coverage operates on a first-party basis, meaning that you make a claim to your own insurance provider for damages to your vehicle, rather than making a claim against the at-fault driver’s insurance. This type of coverage is typically mandatory in all provinces in Canada.
The specific coverage and limits of DCPD coverage can vary by insurance provider and policy type. Some insurance providers may also offer additional options, such as rental car coverage or coverage for towing and storage, as part of their DCPD coverage.
It’s important to keep in mind that while DCPD coverage can provide valuable protection for your vehicle, it may not cover all costs associated with an accident, such as medical expenses or lost wages. To fully protect yourself and your vehicle in the event of an accident, you may want to consider additional insurance coverages, such as liability or accident benefits coverage.
Types of Auto Insurance Coverages FAQs
here are some frequently asked questions about the different types of auto insurance coverages in Canada:
Q: What is liability coverage for auto insurance in Canada? A: Liability coverage is a mandatory type of auto insurance in Canada that covers you in case you cause damage to another person’s property or injure someone in an accident.
Q: What is collision coverage for auto insurance in Canada? A: Collision coverage is an optional type of auto insurance in Canada that covers damage to your own vehicle from a collision with another vehicle or object.
Q: What is comprehensive coverage for auto insurance in Canada? A: Comprehensive coverage is an optional type of auto insurance in Canada that covers damage to your own vehicle from non-collision events such as theft, fire, or vandalism.
Q: What is accident benefits coverage for auto insurance in Canada? A: Accident benefits coverage is a mandatory type of auto insurance in Canada that provides medical and other benefits to injured parties in an accident, regardless of who was at fault.
Q: What is uninsured motorist coverage for auto insurance in Canada? A: Uninsured motorist coverage is an optional type of auto insurance in Canada that covers you in case you are in an accident with an uninsured or hit-and-run driver.
Q: What is personal injury protection for auto insurance in Canada? A: Personal injury protection (PIP) is a type of auto insurance coverage that is not available in all Canadian provinces. PIP provides additional medical and other benefits to injured parties beyond what is covered by standard accident benefits coverage.
Q: What is the minimum amount of auto insurance required in Canada? A: The minimum amount of auto insurance required in Canada varies by province, but it typically includes liability coverage as well as accident benefits coverage.
Q: What is the difference between no-fault and tort auto insurance systems? A: In a no-fault auto insurance system, each party involved in an accident files a claim with their own insurance provider, regardless of who was at fault for the accident. In a tort system, the party that is found to be at fault for an accident is responsible for paying for the damages.
Q: What is the difference between first-party and third-party auto insurance claims? A: First-party auto insurance claims are filed by the policyholder for damages or injuries that they themselves suffer as a result of an accident. Third-party auto insurance claims are filed by someone other than the policyholder, such as another driver or a pedestrian, for damages or injuries that they suffer as a result of the policyholder’s actions.
Q: Are there any additional types of auto insurance coverage available in Canada? A: Yes, there are a variety of additional types of auto insurance coverage available in Canada, including coverage for rental cars, coverage for damage to your own vehicle caused by an uninsured driver, and coverage for custom parts and equipment installed on your vehicle.
About the Author: Valerie D. Hahn
