Auto insurance

Auto insurance (also known as vehicle insurance) is insurance purchased to provide coverage for cars, trucks, motocycles and other road vehicles. It provides financial protection in the case of traffic collisions, for the physical damage to the vehicle and/or injuries and any liabilities that might result from the collision. Auto insurance is mandatory if you own a licensed vehicle. All Canadian provinces and territories require drivers to have at least liability and accident benefits/bodily injury coverage. Some provinces may require additional coverage.

This article only presents a general overview of auto insurance. Rules differ by province and territory, so readers are advised to do their own follow-up research based on where they reside.

Third party liability
According to the Insurance Bureau of Canada (IBC), "provincial governments require drivers to carry a certain amount of third-party liability coverage for any losses they might cause others to suffer. In most provinces, the person who did not cause the collision has the right to sue the at-fault driver in certain circumstances for additional costs and damages not covered by accident benefits." In most provinces the mandatory minimum is $200,000 but it is advisable to get at least a million dollars of third-party liability coverage.

Accident benefits
According to the IBC, "accident benefits coverage pays for medical treatment, income replacement and other benefits to help you recover if you are injured in a collision. This coverage also provides funeral expenses and payments to your survivors if you are killed in a collision. These benefits may also be referred to as “no-fault benefits,” which means they are paid to you by your insurer regardless of who caused the collision. Accident benefits coverage is mandatory in every province except Newfoundland and Labrador."

Collision
As the name suggests, collision coverage "pays for the cost of repairing your car following a collision with another car or an object such as a tree, animal, guardrail or pothole." This is an optional coverage (except in Manitoba and Saskatchewan where it is mandatory ), and very old cars probably don't need it.

Comprehensive
Comprehensive coverage covers "loss or damage to your car resulting from miscellaneous causes including fire, theft, windstorm, hail, rising water, malicious mischief, riot or civil commotion, explosion, earthquake, falling or flying objects, vandalism, missiles, etc. but normally not including loss by collision or upset." Again this is an optional coverage not needed for old cars.

Other options
Other coverage options include:
 * loss of use
 * physical damage to a rental car
 * depreciation waiver
 * emergency road service
 * family protection
 * collision forgiveness

Public or private?
Both private and public insurers supply car insurance in Canada and the situation varies by province. Private insurers provide all the insurance sold in Alberta, Ontario, and the four Atlantic provinces. Government-owned insurers operate in British Columbia, Manitoba and Saskatchewan, where they have a monopoly on basic (mandatory) auto insurance. In these provinces, optional insurance is sold both by the public insurers and competing private companies. Finally, in Quebec, the Société de l’assurance automobile du Québec (SAAQ) provides mandatory coverage for personal injuries, but the rest of the coverage, including mandatory third party liability, is supplied by the private sector.

How to buy
You can purchase private auto insurance from:
 * an insurance broker, with access to a number of different insurance companies
 * an insurance agent, who normally represents only one insurance company
 * a direct writer (an insurance companies selling directly to consumers)

Make sure to compare two or three quotes, with the same coverage parameters.

Choosing the deductible
Insurance claims are subject to a deductible, i.e. an amount not covered. The lower the deductible, the higher the insurance premium. The IBC recommends that you "choose your deductible based on your financial ability to assume this amount in the event of a claim." Choosing a high deductible is a form of self-insurance.

Statistics
The following table shows some statistics from the Office of the Superintendent of Financial Institutions relating to auto insurance claims made to private P&C insurance companies ("Private passenger subtotal") for years 2011 to 2019:

We see that every year, 13-15% of policyholders make a claim (one out of seven), and that the average claim is in the $9k-11k range.

Should you make a claim?
Making an insurance claim may rise your future premiums. To find out if your premiums will rise, by how much and for how long, you can discuss the situation with your insurance company or broker. Then you can make an informed decision on whether to file your claim.

Consumer protection
Insurance company failures, although rare, can and do occur. That's why Canada's property and casualty (P&C) insurance companies fund a special program, approved by government regulators, to protect policyholders and claimants.

In the unlikely event of the collapse of a P&C insurer in Canada, the industry-funded, non-profit Property and Casualty Insurance Compensation Corporation (PACICC) will respond to claims of policyholders under most policies issued by P&C companies. You don't need to apply for protection; it is extended automatically to eligible policies.