Car insurance in Canada varies from province to province regarding regulations, its administration, down to how an insurance claim is handled by an insurance adjuster.
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Some provinces choose to have government-run insurance through their vehicle registration system while other provinces choose to have private insurance companies guide the market.
The cost of auto insurance in Canada compares very differently between provinces, with Ontario being the province with the most costly auto insurance.
Although every province runs its auto insurance system differently, some provinces may seem more or less compared to others.
How is Car Insurance Sold in Canada?
Car insurance in Canada is sold by private insurance companies or by Crown Corporations set up by Provincial government and regulatory bodies.
Methods that Crown corporations such as ICBC, Manitoba Public Insurance, Saskatchewan Public insurance include:
- Through Motor Vehicle Registration
- Through Brokers and Agents (usually for surplus coverage or any gaps that government might now cover)
Methods that Private Insurers use to distribute or sell their insurance product include:
- Directly from the Insurer. No intermediary involved and direct to the consumer
- Insurance Broker. Intermediary involved and an indirect sales channel to the consumer
- Through a combination of Direct Writer Insurance companies, Brokers or Agents
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Public insurance vs. Private Insurance in Canada
Provinces such as Manitoba, British Colombia, and Saskatchewan run their car insurance administration and regulation, while the rest of the provinces are strictly privately run, and some like Quebec with a hybrid system. Government insurance is usually tied into the motor vehicle registration program of that Province. Obtaining car Insurance in government-run auto insurance programs is inclusive with license plate renewals. However, supplemental vehicle insurance can still be purchased through the private insurance market.
Tort based vs no-fault auto insurance systems in Canada
Auto insurance in Canada can either be tort-based or “no-fault” based. Tort based means that the ordinary rule of law will dictate responsibility and indemnification for damages and injuries caused by the wrongdoer. This type of insurance system usually requires the “at fault” insurance company to reimburse the “not at fault” insurance company.
Other provinces such as Ontario, New Brunswick and Quebec use a “no Fault” (inverse liability) based auto insurance system. A “no-fault” auto insurance regime means that you would claim for your own insurance company with no recourse to sue the “at fault” insurance company. The no-fault auto insurance system introduced in Ontario in 1992 by the NDP government was meant to provide claimants with a timely treatment of damages and injuries without and bureaucracy and litigation seen in a tort-based insurance system.
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The term “no-fault” auto insurance can be confusing, as it seems counter-intuitive. Many people believe that fault in a vehicle accident is irrelevant in a “no-fault” auto insurance regime but this is incorrect. The designation of fault or blame is always required to determine financial responsibility and proper insurance rating for everyone. In provinces where “no-fault” auto insurance is the law, a specific set of fault designation rules are applied to help assign fault for every driver of a vehicle accident. For example, in Ontario, the Ontario Fault Determination Rules are referenced by claims adjusters to assign blame in each auto claim. If an accident situation does not fit the scheduled car accident rules, the ordinary rule of law would be used, comparable to tort-based auto insurance systems.
Accident Benefits in Canada
Accident benefits insurance coverage in Canada evolved from medical expense coverage in the 1940s.
Accident benefits insurance aimed to provide medical and rehabilitation coverage for people who were involved in a motor vehicle accident.
Since the inception of accident benefits coverage in the vehicle insurance policy Provinces have developed their variation of the coverage with specific conditions and limitations
Accident benefits coverage is a “no-fault” coverage which means that benefits are paid out to the claimant regardless of fault.
Online Car Insurance Quotes in Canada
Car insurance quotes in Canada can come from either:
- Directly from an Insurance company licensed to sell insurance
- An insurance broker who is an independent, intermediary who requires a license to sell the proper class of insurance to you
- An insurance agent who usually works for or partner shipped with a specific insurance company to exclusively sell their products
- A managing general agent, who sub-contracts a risk to another insurance brokerage that specializes in a certain type of risk.
Provinces that have government-run auto insurance programs have a different method of producing a car insurance quote. Provinces such as Manitoba, British Colombia, and Saskatchewan integrate insurance fees with their license plate renewal program through their respective departments of transportation.
Canadian car insurance quotes come from a handful of leading auto quote generation software programs that many insurance brokers use throughout Canada. Auto quote generation software is intergraded into comprehensive insurance Broker management systems. Some of the leading insurance broker management systems are from companies such as Keal Technologies, Applied Systems, Power Broker, Tech Canary, and Brokercore Inc.
Insurance Brokers in Canada
Insurance brokers play an important role in the distribution of auto insurance to the consumer public in Canada. Insurance brokers are licensed individuals authorized to sell insurance to the public and bring you and the insurance company together into a contractual agreement. The broker is an intermediary is also responsible for ensuring that your insurance needs are met continuously.
- Tasks that Insurance Broker do for you:
- Facilitate the purchase of car insurance
- Compare and contrast auto insurance quotes to get the best coverage for the best price
- Service the Auto Policy Account
- Facilitate with the auto claims process
There seems to be confusion in the insurance marketplace about the meaning of an “insurance broker” concerning its relationship to an insurance company. Many people just assume that an Insurance “broker” is independent and a separate business entity from the insurance company. There’s also an assumption that ALL brokers can supply car insurance from every insurance company available. This couldn’t be further from the truth.
Insurance Broker vs. Independent Insurance Broker
Insurance brokers are governed by provincial, regulatory bodies. For example, the Registered Insurance Broker of Ontario, (RIBO) regulates the licensing, professional competence and ethical conduct of all brokers in Ontario.
Since access to auto insurance in Canada is a legal right, guidelines must be met by insurance brokers and brokerages, so that compliance with the law is met. Most provincial regulatory bodies require that a brokerage have access to more than one market (insurance company). If a provincial regulator dictates that an insurance brokerage requires more than one distribution agreement with an insurance company to be compliant with the law, than exceeding that requirement by merely one more distribution agreement should satisfy the legal requirement.
Car insurance Canada | Province Insights
Car insurance in Ontario is a “no-fault” or “inverse liability” system designed to handle auto claims quickly. Ontario is also known for being one of the most costly provinces to purchase car insurance.
- The minimum liability limit for auto insurance in Ontario is $200,000.
- According to lowestrates.ca, the average cost of car insurance in Ontario is $1,445 a year
Car insurance in Alberta is much like Ontario in that auto insurance can only be purchased through the private sector.
Alberta does not employ a “no-fault” system, compared to provinces such as Ontario, New Brunswick, Nova Scotia, and Quebec. Alberta uses the ordinary rule of law (tort) to assign fault in car insurance claims.
According to lowestrates.ca, the average cost of auto insurance in Alberta is $1,251
Car insurance in Quebec resembles a duel system of automobile insurance. Injuries claims are covered by a government compensation plan, (the SAAQ) and property damages are covered by standard automobile policies sold by private insurance companies.
Quebec’s government compensation plan is funded by premiums collected from driver’s license registration, fuel tax, and license plate registration.
The minimum liability insurance for Quebec is $50,000, a stark contrast to other provinces where the minimum liability limit is $200,000. Since the government of Quebec handles all injuries it’s no surprise that the legal liability limit is much lower than other provinces.
According to lowestrates.ca, the average cost of car insurance in Quebec is roughly $700.
Auto insurance in New Brunswick is very similar to Ontario. New Brunswick became a “no-fault” car insurance system around 2014. Before that New Brunswick was strictly a tort governed province. The decision to move to the No-fault system was to speed up claim, settlements and provide a faster and pleasant experience for the insured.
The minimum liability limit in New Brunswick is $200,000
According to lowestrates.ca, the average cost of auto insurance in New Brunswick is $819
Car insurance in British Columbia is administered by the Insurance Corporation of British Columbia or ICBC. The crown corporation is responsible for providing universal auto insurance, driver and vehicle licensing and registration.
The minimum liability limit in British Columbia is $200,000
British Columbia is strictly a tort governed province, therefore the “no-fault” auto insurance model does not apply.
The average accost of car insurance in British Columbia is $1,680
Car insurance in Manitoba is sold by a non-profit Crown corporation. Manitoba public insurance provides drivers with basic compulsory auto insurance. Optional increase and extensions are available for purchase through private insurers.
The minimum liability limit in Manitoba is $200,000
The average cost of car insurance in Manitoba is $1.080 based on lowestrates.ca
Car insurance in Saskatchewan is another province where a crown corporation administers and regulates auto insurance. The crown corporation is referred to as Saskatchewan General Insurance or SGI.
SGI provides basic compulsory auto insurance coverage through the Autofund. (Trademark name was given to the SGI structural plan) Optional increase in insurance limits, riders and extension are purchased through private insurers.
The minimum liability limit in Saskatchewan is $200,000
The average cost of car insurance in Saskatchewan is $936
Car insurance in Nova Scotia is much like Ontario and New Brunswick in adopting a “no-fault” system of auto insurance. This means that you would claim from your insurance regardless of fault, compared to the tort-based provinces where you have a choice to claim between the responsible insurance companies or claiming directly through your own.
The minimum liability limit for Nova Scotia is $200,000
The average cost of car insurance in Nova Scotia is $842
Newfoundland and Labrador
Car insurance in Newfoundland and Labrador is provided by private insurers. One distinct difference between auto insurance in Newfoundland and Labrador is that Accident Benefits coverage is optional. It’s the only province in which Accident Benefits is not mandatory auto insurance coverage.
Newfoundland and Labrador is a tort governed province. “No-Fault” does not apply in this province.
The minimum liability limit for Newfoundland and Labrador is $200,000
The average cost of car insurance in Newfoundland and Labrador is $1,132
Prince Edward Island
Car insurance in Prince Edward Island, PEI is sold strictly by private insurance companies.
PEI is also a tort governed province, meaning that the “no-fault” system of auto insurance would not apply.
The minimum liability limit for PEI is $200,000
The average cost of auto insurance in Prince Edward Island is $796
Car insurance in the Yukon is provided by private insurers. The Yukon is a tort governed province and does not use the “no-fault” system of auto insurance.
The minimum liability limit for the Yukon is $200,000
The average cost of car insurance in the Yukon is $812
Car insurance in the Northwest Territories is offered by private insurers. The Northwest Territories do not use a “no-fault” system but rely strictly on tort law to govern liability and fault in a claim.
Accident Benefits is also a mandatory coverage in the Northwest Territories.
The minimum liability limit for the Northwest Territories is $200,000
The average cost of auto insurance in the Northwest Territories is $978
Car insurance in Nunavut is almost identical to the Northwest Territories. Nunavut is completely a tort governed province and does not use the “no-fault” system that provinces such as Ontario, New Brunswick, and Nova Scotia use.
The minimum liability limit for Nunavut is $200,000
The average cost of auto insurance in Nunavut is $963
Canadian Car Insurance FAQs
The price of car insurance in Canada varies depending on the Province you live in. Provinces with higher populations, like Ontario, have more traffic congestion and motor vehicle accidents, thus making auto insurance more expensive in those provinces.
Unfortunately, fraud and an eager willingness to litigate have made Canada a very expensive country to purchase auto insurance.
Car insurance in Canada operates on a provincial level. Each province in Canada regulates auto insurance according to their governing bodies. Provinces such as British Columbia, Saskatchewan, and Manitoba run their provincial car insurance programs through non-profit crown corporations. The administration of car insurance by Crown corporations is usually done through Motor vehicle and license plate registration. The remaining provinces are outside the public sector and rely on private insurance companies to meet the needs of the free market. Private insurers use insurance intermediaries such as Brokers and Insurance agents to sell car insurance to the consumer public.
Ways of lowering your car insurance in Canada include:
1. Increasing your deductible
2. Taking advantage of discounts by combining your insurance products under one company
3. Decreasing Insurance Coverage – (never recommended)
4. Switching Vehicles
5. Shopping around for better auto insurance quotes
6. Getting Group Insurance through your employer if available
An average cost for car insurance is difficult to calculate on a provincial level, let alone a national one. Auto insurance in Canada is run on a Provincial level, with varying degrees of cost, offered in each province. Depending on where you live in Canada the cost of auto insurance can be anywhere from $600 to $12,000 for a personal lines auto policy.
No! Auto insurance settlements involving personal lines vehicles would not be taxable.
Rental car insurance in Canada can vary depending on the rental company you decide to use. Larger companies such as Discount Car Rental and Enterprise Rent have better rates than smaller rental vehicle agencies. You could pay roughly $2 to $3 a day using one of the larger companies, or pay anywhere from $10 to $30 a day with a smaller rental vehicle agency.