Car insurance

Understanding car insurance

Car insurance is a protection you must purchase if you own a car or other vehicle. It protects you in case of an accident. Car insurance may protect you from:

Insurance companies may refer to car insurance as property and casualty insurance. Property and casualty insurance also includes home insurance, business insurance and disaster insurance.

If someone who isn't on your policy has an accident with your car, your own premiums may increase.

Who your car insurance policy covers

If you get into a car accident, your insurance may cover:

In some provinces, injured passengers or other people involved in the accident must make a claim with their own insurance first.

If you have additional drivers, you must list their names in your insurance policy. Additional drivers include other drivers in your household who may use your car. For example, to drive to school or work. If they have a poor driving record, your premiums may increase.

Car insurance policy coverage

Coverage is the maximum amount of money your insurance company will pay you if you make a claim. Ask your insurance company what coverage your policy provides.

Liability insurance

Liability insurance covers losses, such as injury or death that your vehicle causes to other people. It also covers damage your vehicle causes to other vehicles. You may need to pay the balance of the settlement yourself. For example, if the cost of the loss or damage is higher than your liability limit.

Liability insurance doesn’t cover the cost of repairs to your own vehicle. You may need to consider additional insurance to cover these costs.

Accident benefits

Accident benefits cover the cost of your own medical expenses and loss of income following a car accident.

Quebec residents are covered for injury or death by Quebec’s public automobile insurance plan. Premiums are part of your driver’s licence registration.

Additional insurance coverage

Your car insurance policy may also provide you with additional benefits.

Collision insurance

Collision insurance covers the cost of repairing or replacing your car if you hit another car or object. Insurance companies may include it in your mandatory insurance coverage.

Comprehensive insurance

Comprehensive insurance covers the cost of repairing or replacing your car due to other types of damage or loss. This may include:

Comprehensive insurance doesn't cover certain loss or damage to your car. For example, if you hit another car or object in a collision.

Optional insurance coverage

Depending on your driving record, you may not be eligible for all types of optional insurance.

Optional insurance pays for risks not covered in your basic policy. Insurance companies call this a rider or an endorsement.

You may also want to consider additional insurance coverage for:

What your car insurance policy doesn’t cover

Most car insurance policies don't cover the loss of personal items. For example, when a thief steals golf clubs, clothing or personal electronics from your car. Your home or tenant’s insurance usually covers these losses.

Check your home insurance policy to find out if it provides coverage for the theft of personal items from your vehicle.

Learn more about home insurance.

Car insurance premiums

Premiums are the amount you pay to buy insurance.

When determining how much you'll pay for premiums, insurance companies may consider factors like:

A deductible is the amount of your claim you agree to pay before your insurance company pays the rest.

Shop around for the lowest insurance premiums

Your premiums will vary from one insurance company to another. Shop around, ask for quotes, and compare prices before deciding on one insurance company. In some cases, you may be eligible for a discount by combining your home and car insurance.

When shopping for a car, check the insurance rating for the car you're thinking of buying. Insurance companies assign ratings based on the claims made on different makes and models. Cars with better ratings are cheaper to insure.

Learn more about car insurance ratings.

In certain provinces and territories, insurance companies may charge higher premiums based on your credit score.

Learn more about how insurance works.

What to do if your car insurance premiums increase

In certain cases, your car insurance premiums may increase. If it does, re-evaluate your needs. Review your insurance needs with your insurance company. Consider asking about the following options to lower your car insurance premiums:

Shop around and get quotes to compare prices from different companies and brokers. Make sure you're getting the best deal.

Car insurance settlement options

Your insurance company will review your claim and decide how it will settle it.

When you make a claim, you're always responsible for paying the deductible. How much money you get from your claim depends on your insurance benefits.

Repair or replacement

Your insurance company will pay for repairs to the same condition your car was in before the damage.

Betterment

You’re responsible for the cost of any additional improvements to your car.

Write-off

Your insurance company may decide to treat your car as a write-off instead of repairing it. For example, if the cost to fix your car is more than its value before the accident. In that case, your insurance company will provide you with a cash settlement. They base the settlement on the value of your car before the accident.

Settling a claim if you have a car loan

If you have a car loan, your car insurance policy will usually include a loss payee clause. A loss payee clause makes your lender your beneficiary. In case of loss or damage to your car, your insurance company will pay your lender (your beneficiary). They’ll pay up to the balance of your car loan when you make a claim.

When you make a claim, your insurance company may, at its discretion, give the money to either:

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