Car Insurance in Ontario, Explained

Your car insurance policy is about to renew and you’re getting as many quotes as possible to save some money. Or your driving habits have changed and you want to know if it’s worth removing the optional portions on your current policy.

This guide will help you decide what insurance coverage you need for your lifestyle and driving habits and which you can do without.

It explains how auto insurance works in Ontario, including how the no-fault system works, how car insurance rates are determined, what each of the mandatory and optional policy components covers and when you can afford to remove the optional ones.

How does car insurance work in Ontario?

Every car owner in Ontario (and across Canada), is required by law to have auto insurance in order to legally drive their vehicle. 

Having car insurance ensures that in the event of a car accident or collision, you are financially protected from having to pay for the repair, medical and legal costs of:

• claims brought against you by others involved, 
• repair or replacement to your vehicle, and/or 
• medical and rehab expenses resulting from injuries suffered,

which can end up being quite considerable.

Auto insurance can be purchased from a licensed broker, agent or insurance company. To get the best rates, we recommend going through a local broker (find one on OntarioBrokers.ca) or an online comparison website such as Rates.ca. You can verify if a provider is licensed here.

What does “at-fault” mean in Ontario?

Ontario operates under a no-fault insurance system, which means that regardless of who is eventually determined to be at fault for an accident, each driver submits claims through their own insurance company instead of going after another person’s insurance company through the court system.

Under Ontario’s Fault Determination Rules (the official regulation), you can be found to be 0%, 25%, 50% or 100% at fault depending on the type of accident and which of the cars involved was yours. More than one driver can be deemed at fault in a single accident.

If you are found to be at fault, this means you are responsible for the damage and injuries caused by the accident, the accident will go on your record and your insurance company may increase your premiums (unless your policy includes accident forgiveness).

Whose coverage applies if I drive someone else’s car in Ontario?

The policy attached to the vehicle is generally the one that provides coverage in the event of a claim. So when you lend your vehicle to someone to drive, you are essentially lending them your insurance. If they get into an accident and are found to be more than 25% at-fault, the event will go on your record and your insurance premium will increase.

You can extend your insurance policy to other vehicles you rent or borrow by adding the optional OPCF 27 Liability for Damage to Non-Owned Automobile(s).

How much does car insurance cost in Ontario?

As of December 2021, the average car insurance premium in Ontario was $1,555 according to the RATESDOTCA auto Insuramap.

As of March 2021, the average car insurance premium in Ontario was $1,651 ($137 per month). In the Greater Toronto Area it was $2,223, $1,564 in other urban areas and $1,289 in rural areas according to the Financial Services Regulatory Authority of Ontario (FSRA). This was a decrease of 0.7% to 1.3% from June 2020.

In 2019, Ontario drivers paid an average of $1,505 annually ($125 per month) according to the Insurance Bureau of Canada (IBC). Drivers in British Columbia paid the most at $1,832 and drivers in Quebec paid the least at $717.

The cost of car insurance in Ontario changes based on rate change requests submitted by insurers to the Financial Services Regulatory Authority (FSRA) on a quarterly basis. The insurers base their requests on actual and projected operating expenses, payouts and risks and profits. FSRA’s role is to ensure they are just, reasonable and not excessive. They publish all rate changes they approve.

Example cost breakdown

To get an idea of how much each of the mandatory and optional types of auto insurance impact your overall premium paid, here is my personal breakdown. 

The amounts will be different from yours due to the wide range of factors that affect your premium, so this is provided for reference only.

For reference, the numbers above are for a 31 year old in Belleville, ON driving a 2016 Hyundai Elantra with ~200k mileage that is currently worth about $10,000 according to a survey of the used cars available on AutoTrader and Kijiji. Currently paying $99.59 per month ($1,194.24 per year).

Mandatory car insurance coverage

At a minimum, drivers in Canada are required by law to have the following components of car insurance coverage. If you have a car insurance policy, it includes:

• Third party liability
• Direct compensation – property damage
• Statutory accident benefits
• Uninsured automobile coverage

Liability (third party liability insurance)

Covers claims made by others against you for their bodily injuries, losses or vehicle damages when you’re at-fault.

A mandatory component that covers any expenses that arise in the event that you are found to be at fault for the accident and are successfully sued for damages by a third party.

The third party could be a: 

• Driver whose car was damaged in the collision
• Pedestrian, cyclist or driver who has been injured/killed
• Neighbour or other property owner whose fence, foundation or other property were damaged
• Passengers in your vehicle, including family members

And the costs may include paying for others’:

• Medical care expenses (can include costs covered under OHIP)
• Compensatory damages: pain and suffering ($370,000 maximum), mental distress, loss of income)
• Punitive damages
• Car repair or replacement
• Property repair or replacement
• and the associated legal expenses

The minimum amount of liability coverage required by law is $200,000, which may sound significant, but most drivers in Ontario have at least an increased limit of $1 million in coverage, which means that they also have $1,000,000 coverage for the Family Protection Endorsement.

The fees can add up quickly and if the claims exceed your coverage, you are personally responsible and you can be forced to sell your assets or have your wages garnished in order to pay for the excess amount.

You have the option of increasing the $200,000 minimum coverage to $500,000, $1 million or $2 million. The cost of doing so is small in most cases.

It does not cover the repair or replacement costs of your own vehicle. That is instead covered by the mandatory Direct Compensation – Property Damage (if you’re not at fault) or the optional collision coverage (if you’re at fault).

Direct Compensation – Property Damage (DC-PD)

Covers damages to your vehicle, its contents and property (lawn, fence) when you are not at fault for a collision.

A mandatory component that covers expenses for repair or replacement of your vehicle, its contents or the loss of use of your vehicle ( that arise in the event of an accident that you are not fully at fault for and if:

• The accident was in Ontario,
• One or more other vehicles were involved in the accident, and
• One or more of the other vehicles are insured by a company licensed in Ontario

If the other driver was unidentified, such as in a hit-and-run, DC-PD does not apply. In this case you can choose to make a claim under the optional collision coverage (if you have it) regardless of whether or not you were at fault. If you do not have collision coverage, you may be able to sue the at-fault driver for recovery.

If the other driver/vehicle was uninsured, see uninsured automobile coverage.

Even though someone else caused the damage, you collect from your own insurer, which means you don’t have to seek compensation yourself and you can be compensated quickly. Most policies do not require a deductible in order to make a claim.

Statutory Accident Benefits

Covers expenses related to injuries resulting from a car accident, regardless of who is at fault and whether you’re the driver or victim.

A mandatory component that covers the following kinds of expenses due to injuries suffered by anyone involved in a collision regardless of who was at fault and may extend to others involved such as a passenger, pedestrian or cyclist:

• Medical and rehabilitation expenses not covered by OHIP or disability insurance plans
• Caregiver or childcare expenses if you can no longer provide care for a dependent
• Attendant care expenses to have someone look after you if you are seriously hurt
• Income replacement if you can’t work
• Non earner benefits if an unemployed person can’t carry on a normal life
• Death and funeral expenses if the insured person dies

The benefit amounts are outlined in the Statutory Accident Benefits Schedule (SABS) – part of the Ontario Insurance Act and claims are resolved by the Automobile Accident Benefits Service (AABS) through your insurer. Summaries of the coverage amounts for each of these can be found here and here. 

There are options to increase the amount of coverage for each benefit, including indexing the amounts to inflation.

Uninsured Automobile Insurance

Covers injuries caused by an unidentified (hit-and-run) or uninsured driver and damages to your vehicle if caused by an identified, but uninsured driver.

A mandatory component that covers expenses for repair or replacement of your vehicle or due to injuries due to an accident with an unidentified driver/vehicle (eg. hit-and-run) or uninsured driver/owner (doesn’t have the mandatory liability insurance) as outlined in Uninsured Automobile Coverage under the Ontario Insurance Act.

Property damage – vehicle and contents

If the other driver is identified, but uninsured, the Ontario Automobile Insurance Policy outlines that your insurer will cover your vehicle and its contents for up to $25,000 (with a $300 deductible), but you must be able to identify the owner or driver of the other vehicle  To recover more than that amount, you have to have collision coverage or sue the other driver.

Bodily injury or bodily injury and property damage

If the other driver is uninsured or unidentified, the Ontario Automobile Insurance Policy outlines that your insurer will cover expenses relating to bodily injury or death up to the minimum liability limit of $200,000. To recover more than that amount, you have to have collision coverage or sue the other driver.

Payments for bodily injury and death have priority on 95% of the total amount payable. Payment for damage to the automobile or contents will have priority on 5%. 

In 2002, the Ontario Ministry of Transportation estimated that up to 6% – or 449,000 – of the more than 7.48 million motor vehicles on Ontario roads were uninsured. Based on provincial collision data from 2002-2006, approximately 2,100 uninsured vehicles were involved in accidents every year. Over the 5 years, 108 people were killed in the collisions and a further 3,717 people were injured. 

As of 2022, there are now almost 8 million vehicle owners and 9.79 million registered vehicles in Ontario.

For more coverage in this area, look into the optional Family Protection Endorsement, OPCF 44R.

Optional car insurance coverage

Optional insurance coverage options include:

• Comprehensive
• Collision
• Specified perils
• All perils
• Optional Ontario policy change forms (OPCF)

When going through the following sections, ask yourself the following questions:

• How often/how far do you drive?
• Where do you drive?
• Am I a defensive driver?
• What is the replacement value of your vehicle?
• Can I afford the unexpected expenses if the worst was to happen?

Loss or damage

Loss or damage is the category of optional coverages relating to your own vehicle and includes the following options: comprehensive, collision, specified perils and all perils.

There is typically a deductible amount associated with each of these coverages, typically ranging from $500 to $2,000.

What is comprehensive coverage?

Covers non-collision damages to your own vehicle that are outside your control

An optional component that covers expenses for repair or replacement of your vehicle when it is damaged by non-driving risks including:

• Fire
• Theft
• Vandalism
• Glass breakage
• Falling objects
• Weather (floods, lighting, hail)
• Hitting an animal

It may be required if the vehicle is leased. Some policies may exclude certain perils. For example, drivers in areas that experience regular wildfires may have that included in their comprehensive coverage. 

It includes perils listed under Specified Perils, falling or flying objects, missiles and vandalism.

If your car is deemed to be a total loss (also referred to as a write-off) because it was stolen or the cost to repair would be greater than its value, you will receive the maximum amount (or coverage limit) which is the assessed “Actual Cash Value” (ACV) of your vehicle at the time of the accident. 

It does not include: 

• Damage caused by collisions with another vehicle: collision coverage
• Others’ medical expenses: liability (if you’re at fault)
• Your medical expenses: accident benefits
• Contents of car that are unattached: DC-PD (if you’re not at fault)

Comprehensive claims are not subject to a fault ruling so they don’t typically increase your premium. However, too many comprehensive claims in a short period of time can lead to rate increases or removal of comprehensive coverage from your policy by your insurer.

What is collision coverage (upset coverage)?

Covers damage to your own vehicle when it collides with a vehicle and you’re at-fault or with another object (including hit-and-run vehicle).

An optional component that covers expenses for repair or replacement of your vehicle in the event that you are involved in a collision with another vehicle and you are determined to be at fault, a single-car collision with an object such as a wall, tree, fence, RV/trailer or a single-car rollover. 

It also provides coverage if your vehicle is hit by an unidentified driver (hit-and-run). It would also come into play if your claims exceed the other driver’s third party liability limit.

If your car is deemed to be a total loss (also referred to as a write-off) because it was stolen or the cost to repair would be greater than its value, you will receive the maximum amount (or coverage limit) which is the assessed cash value of your vehicle at the time of the accident.

Collision coverage is not required for collisions where you are not at fault – in that case, repairs and replacement to your vehicle are covered by the mandatory Direct Compensation – Property Damage.

What is specified perils coverage?

Covers some, but not all, of the perils that make up comprehensive coverage, making it a cheaper alternative.

An optional component that covers expenses for repair or replacement of your vehicle when it is damaged by specific non-driving risks including:

• Fire
• Theft or attempted theft
• Falling objects
• Weather (wind, floods, lighting, hail)
• Earthquake
• Explosion
• Riots
• Hitting an animal
• Damage during transport

It does not include: 

• Vandalism
• Glass breakage

What is all perils coverage?

Covers the combination of comprehensive and collision coverage, plus theft by household member or employee.

An optional component that covers expenses for repair or replacement of your vehicle when it is damaged by:

• collision with another vehicle or object (collision coverage),
• non-collision risks (comprehensive coverage),
• or theft by member of your household or by an employee (such as at repair shop)

Specified and all perils claims are not subject to a fault ruling so they don’t typically increase your premium. However, too many claims in a short period of time can lead to rate increases or removal of the optional coverage from your policy by your insurer.

Optional Ontario policy change forms (OPCF) or endorsements

The following are optional additional provisions that provide increased protection in specific situations:

What is OPCF 5 – Rented or Leased Vehicles?

Extends your insurance coverage to a vehicle you drive that is owned by a leasing company.

What is OPCF 20 – Coverage for Transportation Replacement?

Covers the cost of a rental car or taxi while your vehicle is not available for use.

An optional provision that covers the cost of a rental car or taxi while you’re waiting for your vehicle to be repaired or replaced after it was damaged or lost due to a peril that you are insured for.

There is typically a limit on the number of dollars or days of coverage. In my policy, it is limited to $1500 per occurrence.

What is OPCF 27 – Liability for Damage to Non-Owned Automobile(s)?

Covers damages to a vehicle you drive that are not your own, including rental cars.

An optional provision that covers the cost of repairs if you damage a borrowed vehicle such one that belongs to a friend, family member or rental company, up to a stated limit. In my policy, the limit is $60,000 (Canadian). If you have this endorsement on your policy, you do not need to buy the insurance from the car rental company when you rent a car.

If you rarely drive others’ cars, do not rent cars very often or have a credit card that includes car rental insurance, this provision may not be worth it.

What is OPCF 39 – Accident Forgiveness?

Prevents your premium from increasing when you have your first at-fault accident, but doesn’t protect you if you decide to switch to a different insurance provider.

What is OPCF 43 – Waiver of Depreciation?

Prevents the assessed replacement value of a new car from being reduced by depreciation for a specified period of time.

An optional provision that requires your insurer to pay out the initial value/price you paid for your new vehicle, instead of its depreciated value at the time of the incident in the event your car is deemed a total loss or stolen.

It covers new vehicles for a stated amount of time (2 to 5 years) or certain number of kilometres (eg. 5,000 km) and pays out the lesser of:

• The purchase price you paid
• Manufacturer’s suggested list price on date of purchase
• Current replacement cost for same make and model with similar equipment

New cars depreciate (lose value) quicker than older vehicles, so the depreciated value could be a lot less than your outstanding loan, so this endorsement prevents you from being underwater.

What is OPCF 44R: Family Protection Coverage?

Extends your insurance coverage to the other, at-fault driver when they don’t have insurance, don’t have enough insurance or are unidentified (hit-and-run).

An optional provision that covers medical and recovery expenses in the event that you or a family member are injured in an accident, you are not at fault and the other, at-fault driver does not have enough insurance to compensate your injury claim because they are either uninsured, have less insurance than you or are unidentified, such as in a hit-and-run. 

It provides coverage of up to your Third Party Liability coverage, which is typically $1 million to $2 million when you are not at fault.

For example, if you and your family are involved in an accident and suffer $600,000 in damages, but the at-fault driver has the minimum $200,000 in Third Party Liability coverage, you would only be able to collect $200,000 from that driver’s insurance company. 

However, if you have Third Party Liability coverage of $1,000,000 and the optional Family Protection Endorsement, you could recover the additional $400,000 owing, from your own insurance company.

What is Added Coverage to Offset Tort Deductibles (OPCF 48)?

Reduces the deductible for court awarded compensation for pain and suffering by $10,000 for non-Family Law Act claims and by $5,000.00 for Family Law Act claims.

What insurance applies if the other driver is unidentified (hit-and-run) or uninsured?

Here is what type of coverage applies to yourself and your vehicle when the other driver is at fault based on whether or not they are insured and/or identified. Note: All of these are not equally likely – in most accidents, the driver is insured and identified.

What coverage applies if I am at fault or not at fault?

What if I drive without insurance?

Driving without auto insurance can result in fines of $5,000 to $50,000, suspension of your driver’s licence or having your vehicle impounded. If convicted, you may: 

• be labelled a “high-risk” driver by your insurance company, charging much higher premiums or refusing to sell you insurance,
• not receive income replacement if you are injured,
• not be allowed to sue the at-fault driver, and
• be held personally liable for the other person’s medical costs

What is not covered by car insurance?

Car insurance does not cover damage to your vehicle caused by the usual wear and tear of operating it. This means rust, corrosion, tire damage, mechanical failure or other breakdown are not covered, unless they were the result of a peril that’s covered by your insurance policy.

Your insurance company can deny your claim if the driver was:

• under the influence of drugs or alcohol
• previously convicted of a auto-related Criminal Code offense:
  • Causing death or injury by criminal negligence,
  • Dangerous operation of a vehicle,
  • Failure to stop at the scene of an accident,
  • Driving a vehicle when impaired or with more than 80 mg/100 ml of alcohol in the blood
  • Refusal to provide the police with a breath sample,
  • Causing injury when driving a vehicle while impaired or with over 80 mg/100ml of alcohol in the blood, or
  • Driving the vehicle while disqualified from doing so.

How to save money on car insurance in Ontario?

Review and update the details of your policy

Are you driving less now because you are working from home? Are you driving less in the city because you moved? Did you get married? Have you purchased winter tires or become a CAA member?

Get in touch with your insurance company and update them so that your policy reflects these changes which may cause your premium to decrease.

Removing collision coverage

Doing so means you’ll be on the hook to repair or replace your vehicle. 

For newer vehicles, collision coverage is likely worth keeping. For older vehicles, compare your collision premium to the replacement value of your car, minus the deductible.

The replacement value of your vehicle is the maximum amount of collision coverage your insurance company will pay out if your car is written off and needs to be replaced. 

To get a rough estimate, look up the year, make, model and mileage of used vehicles for sale on Kijiji and AutoTrader. 

The lower the premium for collision and the higher the value of the car, the more sense it makes to keep collision.

For example, if the annual premium for collision coverage is $300, the estimated value of your car is $3500 and your deductible is $500, then you are paying 10% of the available benefit ($3500 – $500 = $3000 ÷ $300 = 10%) of your vehicle every year in return for coverage. If you don’t expect to wreck your car more than once every 10 years, it may not be worth keeping collision coverage.

Put another way, if your car was totaled in a collision where you were at-fault, or by an unidentified hit-and-run driver while you were away from it, would you have the financial means to replace the vehicle and be emotionally able to stomach the loss?

Without collision coverage, you’ll still be protected if you get into an accident that was your fault. Your mandatory third party liability insurance covers your legal liability and the damage to the other person’s car or property (up to its limit) and your injuries are covered under the mandatory accident benefits portion.

Ask about discounts

Find out what discounts are available and applicable to you, such as:

• Group discounts such as a member of CAA (up to 20%), professional association, union, or university)
• Bundling home and auto insurance (5 to 15%)
• Changing into winter tires (5%)
• Paying annually rather than monthly (up to 7%)
• Loyalty discount (5 to 20%) for long-term clients
• Installing a driving monitoring app (up to 30%) (eg. CAA MyPace, Intact myDrive, Desjardins Ajusto)

Removing comprehensive coverage

Doing so means you’ll be on the hook to repair or replace your vehicle.

• Do you drive or park your vehicle in locations that face non-driving risks?
• Could you afford to fix or replace your car if something happened to it?
• How often is your vehicle exposed to non-collision risks, such as fire and theft?

As outlined for collision coverage above, if you drive an older car with a low replacement value that isn’t worth repairing, it may make economic sense to cancel your comprehensive coverage.

However, comprehensive is cheaper than collision coverage, relatively inexpensive and comes if your vehicle is stolen, so it will likely be worth keeping until your car’s value is even lower.

Without comprehensive coverage, you’ll still be protected if you get into an accident that was your fault. Your mandatory third party liability insurance covers your legal liability and the damage to the other person’s car or property (up to its limit) and your injuries are covered under the mandatory accident benefits portion.

Increasing the deductible

Increasing the deductible means paying a larger initial portion of the claim costs, which lowers your insurance premium. However, this also means that the smaller, more common damages –  vandalism and broken windshields in the case of comprehensive insurance – will no longer be protected by insurance since it isn’t worth making a claim if the cost to repair is less than the deductible amount.

For example, you have comprehensive coverage with no deductible and you decide to raise it to $500. Your car’s windshield ends up being broken by a fallen tree. You are responsible to pay the deductible: the first $500 towards the cost of the windshield replacement. However, since the cost to replace the windshield is $300, you don’t go through insurance and have to pay for it out of pocket.

In my case, increasing the deductible on my comprehensive coverage from $500 to $1,000 would save me $13 per year ($1.08 per month) on my $59 per month policy which I decided wasn’t worth it.

Reducing third party liability coverage

Most drivers in Ontario have at least $1 million in third party liability coverage. You have the option of decreasing it to the minimum $200,000 coverage limit, but the difference in premiums between $200,000 and $1 million in coverage is small in most cases, resulting in minimal savings and you’ll have to personally pay for all successful claims against you that exceed that limit.

Who regulates car insurance in Ontario?

The Financial Services Regulatory Authority (FSRA) of Ontario is an arm-length government agency under the Ministry of Finance that acts as the province’s financial regulator, including car insurance, loan companies, mortgage brokers and pension plans.

How to file an auto insurance complaint?

If you believe your insurance company, agent or adjuster has violated the Ontario Insurance Act or regulations, you can file a complaint through FSRA. 

If your complaint has not been resolved, you can contact the General Insurance OmbudService, an independent non-profit that helps Canadian consumers resolve disputes or concerns with their auto insurer for free. Here are some example case studies.

Over to you

We’re interested to know – what do you pay for your car insurance? What optional coverage do you have and why? Let us know by leaving a comment below!