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What is the Mandatory Car Insurance in Ontario?

By My Insurance Broker  •  My Insurance Broker
December 17, 2017  •  6 minute read

If you live in Ontario, you must carry a minimum amount of car insurance. You also have the option to buy additional coverage that protects you in the event of certain types of accidents, such as damage caused by vandalism and theft. Here, we’ll explain which types of coverage are legally required, as well as reasons why you might want to purchase more than the legal requirements.

CoverageOntario RequirementOur RequirementOur Recommendation
Third Party Liability Coverage$200,000$1 Million$2 Million
Statutory Accident Benefits Coverage
Uninsured Automobile Insurance
Direct Compensation - Property Damage (DC-PD) Insurance

Required Car Insurance in Ontario

While every province in Canada requires drivers to maintain a certain amount of car insurance coverage, the requirements vary. If you drive in Ontario, it’s important to make sure your car insurance policy complies with the minimum car insurance rules per the Financial Services Commission of Ontario (FSCO), which oversees the Ontario insurance industry.

And if you live in Ontario, driving without insurance could cost you. The penalties for getting caught driving without proper insurance coverage include fines up to $50,000 and a one-year suspension of your driver’s licence. This is why it’s important to get covered.

No matter what type of car you drive, which age or gender demographic you fit in, or what kind of accident history you have, minimum car insurance requirements mean you must carry a specific amount of four types of coverage: third party liability insurance, accident benefits insurance, uninsured automobile insurance, and direct compensation - property damage insurance.

  • Third Party Liability Coverage - This type of insurance covers you if you cause an accident that hurts or kills another person, or causes property damage to their car. Under FSCO rules, all Ontario drivers must carry at least $200,000 in third party liability coverage. For many reasons, a lot of people choose to carry more than this minimum amount.
  • Statutory Accident Benefits Coverage - This insurance pays for your supplemental medical care, attendant care, rehabilitation, and 70 per cent of your income up to $400 each week if you’re hurt in a car accident.
  • Uninsured Automobile Insurance - Under Ontario law, you must also maintain uninsured automobile insurance, which covers you in the event you’re struck by an uninsured motorist or hit-and-run driver. This coverage also pays benefits to families who lose a loved one in an accident caused by an uninsured or hit-and-run driver.
  • Direct Compensation - Property Damage (DC-PD) Insurance - If another motorist causes your accident, DC-PD insurance will pay for the damage to your vehicle and compensate you for its loss. However, DC-PD benefits only apply if the other driver is at fault, the other driver is also insured under Ontario law, and the car accident took place in Ontario. Understandably, many drivers choose to purchase additional insurance that covers them if an accident occurs outside the province, or in cases where the other driver was uninsured or underinsured.
What car insurance do you need to stay legal in Ontario? Here’s how you can stay within the law — and protect yourself if you do get into an accident.

More Than the Minimum: Additional Ontario Car Insurance

While it’s always good to comply with the minimum Ontario car insurance requirements, you might need more than the basics to ensure you’re totally covered in the event of an accident.

While Ontario’s no-fault car insurance rules ensure that everyone gets compensated for injuries and damage caused by an accident, the minimum coverage only goes so far.

  • Additional Third Party Liability Coverage - While the legal minimum insurance requires $200,000 of third party liability coverage, many drivers pay for extra coverage up to $2 million so they’re covered in case someone else is injured or killed, or an accident causes property damage.
  • Additional Statutory Accident Benefits - The Mandatory Accident Benefits coverage provides replacement income, however, only up to a point. The minimum coverage offers just 70 per cent income replacement of your gross income capped at $400 a week. Many people choose to add on to the minimum requirements, including purchasing additional coverage for medical costs, attendant care, housekeeping benefits and funeral costs.
  • Additional Property Damage Insurance - If you’re at fault for an accident, you aren’t eligible for DC-PD coverage. For this reason, some individuals choose to buy additional insurance that covers them even if they’re responsible for the accident.

Where to Get the Best Insurance Quotes

The good news is you have a wide range of options when it comes to buying the minimum required Ontario car insurance. If you’re looking for car insurance, you can work with any of the following:

  • Insurance Broker - An insurance broker typically offers plans from a number of insurance companies. The catch is that they can only offer you plans and pricing from the companies they represent, which may be limited to a handful.
  • Direct Writer - As the name suggests, a direct writer sell insurance directly from the insurance company it represents.
  • Insurance Agent - Most insurance agents only work for one insurance company, which means their options are limited. Likewise, this means your options are limited.
  • Comparison Site - Comparison sites like My Insurance Broker offer competitive pricing and plans from 15 different insurance companies licensed to sell car insurance in Ontario. You can get quotes in two minutes using our quick quote online tool.

You can also use our Ontario car insurance calculator to determine how much you’ll pay for car insurance.

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

If you shop around for car insurance in Ontario, you may experience something akin to sticker shock. It’s well known that Ontario drivers pay the highest car insurance rates in the country. Peter Cheney of The Globe and Mail reports that in 2012, the average annual car insurance premium in Ontario was $1,544.86 — a whopping 45 per cent higher than Alberta, which had the second-highest premiums in the country.

But why? Is there something inherently expensive about Ontario? Well, actually, yes. Unlike other provinces, Ontario doesn’t have public car insurance, which means insurance rates aren’t a level playing field for all drivers. In other words, certain demographics bear the brunt of the cost. By contrast, provinces with public car insurance programs distribute costs evenly among all drivers rather than unfairly penalize those they deem a statistical risk.

Ontario is also home to a troubling amount of insurance fraud. Nick Boisvert of CBC News reports that car insurance fraud costs as much as $1.6 billion each year. Unfortunately, fraudulent claims have a ripple effect that inflates the cost of car insurance. To combat false and misleading claims, the government has already created the Ontario anti-fraud task force. The government has also pledged to take steps to reduce car insurance rates by 15 per cent from their 2013 levels.

Ways to Save on Ontario Car Insurance

If you’re like most people, you’re always looking for ways to pay less for car insurance while still getting great coverage. Fortunately, there are several things you can do to lower your premiums.

Here are six ways to pay less for the Ontario car insurance coverage you need:

Be a Careful Driver

It may sound obvious, but one of the of the best ways to lower your rates is to never get into an accident in the first place. You should also ask about accident forgiveness, especially if you have gone years or decades without a scratch or dent.

Don’t Be Afraid to Look for a Better Deal

Just because you got a good deal on car insurance five years ago doesn’t mean it’s still the best deal in town. As with most things in life these days, you can shop online for the best deal on car insurance in Ontario.

Reevaluate Your Coverage

While it’s important to be protected, you might be paying for car insurance coverage you don’t really need. Think about how often you drive and what types of driving you do. Are you an urban driver who commutes every day? Or do you mostly drive in town for short trips in low-risk areas? You might be able to drop some coverage or lower the amount of coverage in your policy.

Assess Insurance Before You Buy a New Car

The cost of your car insurance depends on a few factors, including the type of vehicle you drive. In short, you’ll pay more for a sports car than a minivan. Insurance companies are always looking at statistics and data, and they charge more to insure cars that tend to rack up the most accidents or tickets. If you’re in the market for a new vehicle, think carefully about insurance costs before you buy.

Consider Bundled Policies

Many insurance companies offer discounts if you buy several policies at once. If you own a home, you can ask for a discount if you use the same insurer for your homeowner’s policy and car insurance. Many people also like bundling their insurance because they find it’s easier to keep track of their coverage and their premiums when they work with a single insurance company.

Prepay Your Policy

If you can afford it, you can usually save by prepaying your entire policy for the year up front rather than making monthly payments.

We’ll Help You Find the Best Insurance for You

Figuring out what level — and how much — insurance you need can be frustrating. We can help you figure things out.

Get started figuring out what insurance plan is best for you by using our online insurance calculator and quote tool to receive a quote in just two minutes. You can also call 1 (866) 482-5001.