What you need to know about mandatory auto coverage requirements in Canada
In Canada, we like to think that we do things a bit differently than in the United States. However, one of the ways that we’re similar to our southerly neighbours is in the way that we handle mandatory auto insurance coverage requirements. In Canada, it is mandatory to have third-party liability insurance before you register a vehicle.
While other forms of insurance – supplemental health insurance, life insurance, dental insurance – are useful, none are required by the provinces. Mortgage holders are sometimes required to purchase life, disability, or fire insurance to cover their interests, but these are private requirements, independent of the government.
Third-party liability auto insurance coverage in Canada
Despite the much lower medical costs in Canada when compared to the United States, Canadians are required to have several times more liability auto coverage than what is mandatory in America. Aside from two provinces – Nova Scotia and Quebec – the minimum required third-party liability coverage is $200,000. In Nova Scotia, the minimum is $500,000, while in Quebec the minimum is only $50,000.
Quebec is an interesting case. While its third-party liability minimum is the lowest in Canada, bodily injuries are covered through a public insurance plan administered by the government. The $50,000 coverage applies only to non-bodily injuries like property damage, and only to injuries that occur within the province.
Public insurance schemes
Canada has embraced public welfare systems more easily than America. In Canada, four provinces offer public insurance schemes to their residents.
Quebec’s public insurance program (Société de l'assurance automobile du Québec, SAAQ) covers bodily injuries through a public insurance program that is paid for with large yearly license renewal fees. Drivers who travel outside the province should also remember to add out-of-province auto insurance coverage (available from the private market) to avoid unfortunate surprises in the event of an out-of-province accident.
British Columbia, Manitoba, and Saskatchewan each mandate that their $200,000 minimum third-party liability insurance be bought through the public insurance system, with additional coverage offered through the public or private market. The public auto insurance systems in each of these provinces are called the Insurance Corporation of British Columbia (ICBC), the Manitoba Public Insurance (MPI) and the Saskatchewan Government Insurance (SGI).
The other six provinces require insurance to be purchased on the open market. Because of this, insurance rates can vary wildly even in bordering provinces. In provinces with public insurance systems, having only one provider means that the price set is the price paid, with no room for negotiation. The lack of choice may also cause discontent with consumers who have had poor experiences with the public insurance scheme and wish for other options.
Optional auto insurance coverage in Canada
As with all insurance policies there, are plenty of add-ons available to supplement coverage. Many people find $200,000 in coverage too little, and cover themselves for $500,000 or $1 million.
Collision coverage is also very popular with many drivers seeking to insure their own vehicle in case of an accident. Although pricey, without collision insurance drivers who suffer damages – either property or bodily – will not receive compensation from their insurance company.
Research your options for auto insurance coverage in Canada, make sure you are following the law, and then make sure your best financial interests are covered.