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April 19, 2017  •   6 minute read

What Does Car Insurance Cover In Toronto

If you drive in Toronto, you’re required by law to purchase car insurance. However, you have choices when it comes to your coverage — including the option to buy more than the legal minimum.

Car insurance in Ontario may seem confusing, but it’s actually quite straightforward once you learn more about it. We review what you can expect from your car insurance, talk about why Ontario drivers pay the highest car insurance rates in the country, and discuss tips for getting the best deal on car insurance in Toronto.

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Mandatory Car Insurance in Toronto, Ontario

No matter where you live in Canada, you’re legally required to maintain car insurance if you drive. However, the amount of mandatory coverage varies by province. If you’re new to Ontario, or you’re ready to get your first driver’s licence, it’s important to know the rules before you get behind the wheel, as driving without insurance is a serious offence that can cost you up to $50,000 in fines and the loss of your licence for up to one year.

The Financial Services Commission of Ontario (FSCO), which regulates the insurance sector in Ontario, requires all drivers in the province to maintain a certain amount of third party liability coverage, accident benefits coverage, uninsured automobile coverage and direct compensation - property damage coverage.

Let’s look at each type of coverage the FSCO requires:

  • Third Party Liability Insurance - In Ontario, the law requires drivers to buy $200,000 in third party liability coverage. This coverage protects you if you’re involved in an accident that injures or kills another person, or if you damage their vehicle. Many motorists choose to purchase more than the minimum third-party liability insurance.
  • Statutory Accident Benefits Insurance - Drivers in Ontario must also carry accident benefits coverage, which pays for your injuries if you’re hurt in an accident. These benefits include supplementary medical care, attendant care, income replacement and rehabilitation. As with third party liability coverage, you can increase the minimum requirements for Statutory Accident Benefits.
  • Uninsured Automobile Insurance - Unfortunately, not everyone complies with the law regarding mandatory minimum car insurance. If you’re injured by a hit-and-run driver or uninsured motorist, your uninsured automobile coverage will pay for your injuries and damages. This coverage also provides benefits to your family if you’re killed by an uninsured motorist or hit-and-run driver.
  • Direct Compensation - Property Damage (DC-PD) Insurance - Often abbreviated DC-PD, direction compensation - property damage insurances covers damage to your vehicle and provides compensation for the loss of your vehicle in the event another driver is at fault in the accident. In Ontario, your own insurer provides DC-PD coverage, even though the damage was caused by the other driver.

DC-PD coverage only applies in a strict set of circumstances: the other driver must be at fault, the other driver must carry Ontario car insurance and the accident must have occurred in Ontario. This is why many drivers choose to purchase additional coverage that protects them even in accidents that don’t meet these rigid criteria.

What car insurance do you need to be covered in Toronto? Here’s everything you need to know to stay legal – and adequately protected.

Optional Car Insurance in Toronto, Ontario

As anyone who has ever been in a car accident knows, you can’t predict how bad it’s going to be. Furthermore, some injuries can end up costing long-term health problems. Personal injuries can force you to take off work for weeks or even months. Damage to your vehicle can leave you without transportation.

When you follow the law, you can rest easy knowing you’ve got a minimum amount of insurance coverage. And because Ontario has a no-fault insurance system, you know your damages will be paid promptly by your own insurance company.

But what if the minimum amount of coverage isn’t enough? Unfortunately, many people discover they’re underinsured after an accident. Furthermore, the minimum insurance requirements don’t cover all types of damage. If you’re responsible for an accident that leaves someone with catastrophic injuries, you could face a multimillion-dollar lawsuit.

This is why many drivers choose to purchase car insurance that exceeds the statutory minimum.

So, what do drivers in Toronto typically end up purchasing?

  • Additional Third Party Liability Insurance - For example, many drivers choose to increase their third party liability coverage to $500,000, $1 million or $2 million.
  • Additional Statutory Accident Benefits - The Mandatory Accident Benefits coverage provides income replacement of 70 per cent of your gross income up to $400 each week. However, you can purchase additional coverage that pays benefits up to $1,000 each week. You can also buy additional coverage for medical, rehabilitation and attendant care benefits, as well as additional caregiver, housekeeping and death benefits.
  • Additional Property Damage Benefits - While the mandatory DC-PD coverage applies if another driver causes damage to your vehicle, it doesn’t cover property damage when you’re at fault in the accident. To protect themselves, many drivers choose to purchase extra coverage that covers this type of accident damage, or insurance that covers “all perils” in an accident.

Why Ontario Drivers Pay the Highest Car Insurance Rates in the Country

Drive in Ontario long enough, and you’ll notice that car insurance rates can be pricey — something that often shocks newcomers to the province. Understandably, many drivers want to know why Ontario drivers pay so much for car insurance, especially compared to people who live in other parts of the country.

There are a few reasons why car insurance tends to cost more in Ontario. First, Ontario has enacted a no-fault insurance system, which some experts say is vulnerable to inefficiency. The province is also the most populous in the country, and it’s home to the nation’s largest metropolitan centres. Ontario also sees a troubling amount of insurance fraud.

The No-Fault Insurance System

No-fault insurance is supposed to help accident victims receive compensation without unnecessary delay, however, some insurance experts say the system doesn’t operate as effectively as it should. David Marshall, former head of the Workplace Safety Insurance Board, studied Ontario’s insurance system on behalf of the Liberal government.

In his report, which was summarized by the Toronto Sun, Marshall stated, “Overall, Ontario has one of the lowest levels of auto accidents and fatalities in Canada and the most expensive auto insurance premiums. (The system) is filled with disputes and inefficiencies, and a very high percentage of premiums are being used to pay experts and lawyers and not going directly to injured persons.”

Higher Cost of Living

As the country’s most populous province, Ontario is home to the nation’s busiest urban hubs. In 2017, Vice Money reported that “Toronto has become an absurdly expensive city to live in.” Just about everything in Toronto costs more than it does elsewhere — the price of childcare has jumped 30 per cent, public transit prices have increased by 36 per cent and the average price for a single detached home is $1.2 million.

Auto Insurance Fraud and the Ontario Anti-Fraud Task Force

Auto insurance fraud is also an ongoing — and growing — problem in Ontario. According to Finance Minister Charles Sousa, “Auto insurance fraud has become an industry and it’s time to stop it.” The Star reports that Sousa estimates it costs Ontario taxpayers $1.6 billion every year.

Car insurance fraud can occur in many ways, including staging an accident, lying about a crash, filing a fraudulent claim, obtaining unwarranted healthcare treatments and filing misleading documents. However it happens, it’s a costly problem that causes everyone to pay more for car insurance. To combat the problem, the government has created the Auto Insurance Anti-Fraud Task Force, which investigates suspected car insurance fraud.

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How to Get the Best Deal on Car Insurance in Toronto

Ontario may have the highest car insurance rates in the country, but that doesn’t mean you’re stuck paying top dollar for the coverage you need. By following a few simple tips, you can obtain an affordable policy that gives you comprehensive protection.

Assess the Coverage You Need

Depending on your circumstances, you may want to adjust your coverage up or down. Do you commute to Toronto each day for work? In that case, you might want maximum coverage. However, if you mostly use your car for errands or short trips to the store, you could probably get by with less.

Shop Around for the Most Affordable Coverage

When it comes to choosing car insurance, you have a lot of places to shop. Many people work with an insurance agent, but you can also purchase car insurance from a broker, a direct writer or a comparison website like My Insurance Broker.

One of the advantages of working with a car insurance comparison website is the ability to get insurance quotes from 15 of the top car insurance companies in Canada. You can also use our online insurance calculator and quote tool to receive a quote in just two minutes. You can also call 1 (866) 482-5001.

Ask About Accident Forgiveness

No one is perfect, and an accident can happen to anyone. However, you shouldn’t have to pay for a mistake indefinitely. If it’s been awhile since your car accident, and you’ve maintained a clean driving record since then, you may be eligible for reduced car insurance rates. It never hurts to ask!

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