When did car insurance become mandatory?

Car insurance requirements are established and regulated at the provincial or territorial level in Canada. This means that the timeline for when car insurance became mandatory varies from one jurisdiction to another. Here is a general overview of when mandatory car insurance was introduced across various provinces and territories:

1. British Columbia (BC): The Insurance Corporation of British Columbia (ICBC) has been providing basic automobile insurance since 1974. Before that, vehicle owners were not legally required to have insurance, though many chose to do so voluntarily.
2. Alberta: Mandatory car insurance took effect in 1972.
3. Saskatchewan: Government auto insurance was introduced in 1945, and third-party liability insurance became mandatory.
4. Manitoba: Manitoba Public Insurance has been offering basic automobile insurance since 1971.
5. Ontario: Mandatory auto insurance was implemented in 1980.
6. Quebec: The Automobile Insurance Act came into force in 1978, making car insurance mandatory.
7. New Brunswick: Compulsory automobile insurance was introduced in 1983.
8. Nova Scotia: Mandatory car insurance was implemented in 1983.
9. Prince Edward Island (PEI): Compulsory auto insurance was established in 1974.
10. Newfoundland and Labrador: Mandatory automobile insurance was introduced in 1972.
11. Yukon, Northwest Territories, and Nunavut: While exact dates might vary slightly for each territory, mandatory car insurance was generally established in the 1970s.
12. Other Provinces: Some other provinces may have their own timelines, but by the 1980s, mandatory car insurance was common throughout most of Canada.

While all provinces and territories in Canada require a certain level of car insurance, the specific types and amounts of required coverage can vary. Some provinces have government-run insurance programs, while others use private insurers or a mix of both.

Why did insurance become mandatory?

In Canada, as in many other countries, the introduction of mandatory auto insurance was driven by several factors, all aimed at protecting drivers, passengers, and others involved in or affected by road accidents. The primary reasons for making auto insurance mandatory in Canada include:

1. Public Protection: One of the primary reasons to make car insurance mandatory is to ensure that if someone is injured or their property is damaged due to a car accident, there will be financial means available to compensate them. Without mandatory insurance, victims of car accidents might be left with no recourse to recover costs associated with their injuries or property damage.
2. Financial Responsibility: By ensuring all drivers have insurance, the government ensured that drivers have a means to cover the costs they might be legally obligated to pay if they are at fault in an accident.
3. Reduce Uninsured Drivers: Before mandatory insurance, many drivers chose to drive without insurance, either to save money or because they believed they didn’t need it. However, this posed a significant risk, as those without insurance often lacked the financial means to cover the costs if they were at fault in an accident.
4. Equity and Fairness: Mandatory insurance ensures that everyone shares the responsibility of contributing to the system that compensates victims. Without such a system, responsible drivers who chose to purchase insurance would effectively subsidize those who opted out, as they would often end up bearing the cost of accidents caused by uninsured drivers.
5. Economic Stability and Health Care Costs: Road accidents can result in significant medical costs. Mandatory insurance ensures that these costs are covered, reducing the financial burden on the healthcare system and, by extension, taxpayers.
6. Consistency and Regulation: With mandatory insurance systems, provinces could establish minimum standards for coverage, ensuring that everyone had at least a basic level of protection. This allowed for better regulation of the insurance industry and ensured consistent protection for all drivers.
7. Road Safety: Some argue that mandatory insurance indirectly promotes road safety. Knowing that they are insured might make some drivers more cautious and responsible on the roads, though this can be debated.

The push for mandatory insurance was also influenced by increasing automobile use throughout the 20th century, resulting in more cars on the road and, consequently, more accidents. As cars became essential for daily life and the potential for accidents grew, the need for a system to address the financial consequences of those accidents became more apparent.

While the overarching reasons for introducing mandatory insurance might be similar across provinces, each province’s individual context, politics, and public sentiment played roles in the specific timing and nature of the insurance systems they adopted.

Mandatory car insurance requirements in Canada

In Canada, car insurance is regulated at the provincial and territorial level. Each province and territory has its own set of regulations regarding what coverage is mandatory and the specifics of that coverage. Below is an overview of the mandatory car insurance requirements across Canadian provinces and territories:

1. British Columbia (BC):
   • Basic coverage provided by the Insurance Corporation of British Columbia (ICBC) includes third-party liability, underinsured motorist protection, accident benefits, hit-and-run and uninsured motorist coverage, and inverse liability.
2. Alberta:
   • Mandatory third-party liability: Coverage of at least $200,000.
   • Accident benefits: Includes medical and rehabilitation coverage, death benefits, and funeral expenses.
3. Saskatchewan:
   • Government-run insurance through Saskatchewan Government Insurance (SGI) provides mandatory personal injury and liability coverage.
   • There are options for reduced no-fault coverage or the tort system.
4. Manitoba:
   • Basic Autopac coverage by Manitoba Public Insurance (MPI) provides personal injury coverage and third-party liability.
   • No-fault system is the standard, but drivers can opt for the tort system.
5. Ontario:
   • Mandatory third-party liability coverage of at least $200,000.
   • Statutory accident benefits: Includes medical and rehabilitation expenses, income replacement, and more.
   • Direct compensation – property damage coverage.
   • Uninsured automobile coverage.
6. Quebec:
   • A hybrid system where bodily injuries are covered by the Société de l’assurance automobile du Québec (SAAQ) and property damage by private insurers.
   • Mandatory civil liability coverage of at least $50,000 for property damage.
7. New Brunswick:
   • Third-party liability coverage with a minimum of $200,000.
   • Accident benefits.
   • Uninsured and unidentified motorist coverage.
8. Nova Scotia:
   • Third-party liability coverage of at least $500,000.
   • Accident benefits.
   • Uninsured and unidentified driver coverage.
9. Prince Edward Island (PEI):
   • Third-party liability coverage with a minimum of $200,000.
   • Accident benefits.
   • Uninsured motorist coverage.
10. Newfoundland and Labrador:

• Third-party liability coverage with a minimum of $200,000.
• Accident benefits.

11. Yukon:

• Third-party liability coverage with a minimum of $200,000.
• Accident benefits.
• Uninsured motorist coverage.

12. Northwest Territories:

• Third-party liability of at least $200,000.
• Accident benefits.
• Uninsured motorist coverage.

13. Nunavut:

• Third-party liability coverage with a minimum of $200,000.
• Accident benefits.
• Uninsured motorist coverage.

While these are the basic mandatory coverages for each province and territory, drivers often have the option to purchase additional coverages (such as comprehensive or collision) or increase their limits. It’s important to consult local regulations or an insurance professional for the most accurate and up-to-date information for each jurisdiction.