Canadian motorists, regardless of where they live, are required by the law to take out car insurance. Getting caught driving without one carries serious legal consequences, including hefty fines, and can impact future eligibility for obtaining coverage.
This type of protection, however, is also among the biggest costs associated with owning and operating a vehicle – and depending on a driver’s personal circumstances, accessing coverage can sometimes come with a huge price tag.
But each province and territory implement different auto insurance systems, which results in varying levels of protection and premium prices for motorists across the nation.
For those living in British Columbia and Manitoba, car insurance is regulated by government-owned organizations, the Insurance Corporation of British Columbia (ICBC) and Manitoba Public Insurance (MPI). Auto insurance in Saskatchewan is also run by a Crown corporation, Saskatchewan Government Insurance (SGI), but motorists can purchase additional coverage through private insurers.
In Québec, the Société de l'assurance automobile du Québec (SAAQ), another public institution, handles minimum limits for bodily injury, while private companies offer third-party liability, property damage, and additional protection. Drivers in the remaining provinces and territories can purchase car policies from private carriers.
What does car insurance cover?
Provinces and territories have their own rules and regulations when it comes to mandatory coverage, but there are similarities. These are:
- Third-party liability: This covers the cost of lawsuits if a motorist is responsible for an accident that causes bodily injury, death, or property damage. The minimum amount varies depending on the location but is typically pegged at $200,000.
- Uninsured automobile/motorist: This coverage kicks in if the policyholder or their passenger is injured or killed by an uninsured driver or in a hit-and-run incident. It also covers damages to the vehicle.
- Accident benefits: This pays out for medical treatment and income replacement if the policyholder is injured in an accident, regardless of who is at fault. It also covers funeral expenses should the driver succumb to their injuries.
- Direct compensation property damage (DCPD): Applicable in Ontario, Québec, Nova Scotia, New Brunswick, and Prince Edward Island, this policy covers damages to the vehicle and its contents resulting from an accident with another insured vehicle as long as the policyholder is not at fault.
Canadian auto insurers also offer optional coverages for enhanced protection, including:
- Collision coverage: This covers repair costs incurred if the policyholder’s vehicle collides with another vehicle or object, even if they are at fault or someone else was driving the car. It also pays for a replacement if the vehicle is wrecked beyond repair.
- Comprehensive coverage: This covers repair costs from damages caused by vandalism, theft, fire, natural disasters, and other hazards.
- Specific-perils coverage: This protects against losses from specific perils identified in the policy.
- All-perils coverage: Compulsory in Manitoba and Saskatchewan, this covers everything under collision and comprehensive policies and all other incidents beyond the policyholder’s control.
How much does car insurance cost in Canada?
Because of the disparity between how the car insurance system works between provinces and territories, auto insurance rates across the country can also vary significantly, depending on where a motorist resides.
To find out the average car premiums across the nation, the online insurance comparison platform HelloSafe.ca calculated the rates compiled from a survey of 13,650 Canadian users. Here is how much motorists pay in premiums annually in each province and territory, starting with the most expensive.
- British Columbia – $1,832
- Ontario – $1,528
- Alberta – $1,514
- Saskatchewan – $1,233
- Newfoundland and Labrador – $1,168
- Manitoba – $1,080
- Northwest Territories – $978
- Nunavut – $963
- Nova Scotia – $891
- New Brunswick – $867
- Prince Edward Island – $816
- Yukon – $812
- Québec – $717
HelloSafe.ca pointed out, however, that these figures are merely an estimate and that final prices will vary depending on the specific requirements of each driver.
How can Canadian motorists save on car insurance premiums?
As the figures above indicate, there is a massive difference between auto insurance rates for drivers living in different parts of the country. In Québec, for example, where average car premiums are the cheapest, prices are about 160% lower than those in British Columbia, the province with the highest rates.
Industry experts, however, admit that there is no “simple and straightforward” way of “getting the best deal on car insurance” as premiums are based on “how much risk insurers perceive [a driver] to be.”
To find out how Canadian motorists can reduce car insurance costs, Insurance Business checked the websites of various industry specialists, from personal finance firms to auto insurers. Here are some practical tips and strategies we gathered.
1. Shop around for and compare insurance rates.
Because premium prices vary depending on a motorist’s individual circumstances, it is often difficult to determine which policies offer the greatest savings. This is where price comparison websites come in handy, according to Canada Drives. The online vehicle retailer, however, admits that this strategy does not work for everyone.
“Comparison sites and online reviews will help you learn a lot about which providers offer the greatest value,” the firm noted. “[However], shopping around isn’t possible for all Canadians. Public insurance providers are the only options available in provinces like BC, Manitoba, and Saskatchewan. But if you live in high-competition provinces like Ontario or Alberta, you have the option to shop around for the best auto insurance rate.”
2. Maintain a clean driving record.
Keeping a clean driving history is one of the best ways Canadian motorists can access affordable car insurance premiums.
“Having a clean driving record shows your insurance company that you’re a responsible driver that doesn’t pose a considerable risk to other motorists,” explained insurance brokerage firm Surex. “In fact, if you go an extended period without submitting a car insurance claim, you may become eligible for a claims-free discount, which can help you save as much as 10% on your coverage.”
The firm added that several auto insurers offer conviction-free discounts, ranging from 15% to 25%.
“Obey those road rules and reap the financial reward from your insurance,” Surex noted.
3. Skip unnecessary coverage
Auto insurance companies also offer a range of coverage options that impact how much premiums will cost. For this reason, Canada Drives advised drivers to ditch the coverage they do not need, so they can reduce car insurance rates.
“Depending on the age of your car, where you live, and what your driving habits are like, you may not need a fully loaded policy,” the retailer wrote on its website. “Reviewing your policy annually, and reassessing your insurance needs, is critical.
“For example, maybe your car has gotten to an age where collision coverage no longer makes economic sense. In the event your car gets wrecked, you might get less back in coverage than what you are paying in premiums.”
4. Take a defensive driving course.
Young and inexperienced drivers can benefit from taking a reputable driver’s training course as this can help lower their car insurance rates, which are often significantly higher compared to those of older and experienced motorists.
“If you are a new driver, reassure insurance companies that you are low risk by taking a recognized driver’s education course,” advised insurance marketplace RATESDOTCA. “Most companies are willing to offer new drivers a reduced rate for successful completion.”
The firm added that motorists can find a list of registered and approved driver training programs on the transportation ministry websites of their provinces.
5. Bundle policies.
Most insurance companies offer huge discounts to policyholders who bundle policies together. According to Surex, most insurers slash between 10% and 20% in auto premiums if bundled with home policies, and up to 40% if combined with motorcycle plans.
The firm added that insurance carriers want policyholders to bundle multiple policies because “it’s a win-win situation for both.”
“Insurance companies benefit from bundling because they are able to generate more business, and policyholders benefit from bundling by saving a significant amount on their coverage,” it noted.
6. Consider a higher deductible.
Raising their deductible allows motorists to pay lower premiums. But this also increases the amount they need to pay before their auto insurance picks the tab in the event of an accident or theft.
“A higher deductible means you’re agreeing to take on a larger portion of the cost in the event of a claim, thus reducing the financial obligation of the insurance company,” RATESDOTCA explained. “If you are confident in your ability to stay accident-free, choosing a higher deductible can save you money. But remember, it also results in greater financial burden if a claim has to be made against the policy.”
7. Choose your ride wisely.
The type of car a person drives plays a huge part in how premiums are calculated. Typically, an insurance company factors in the vehicle’s make, model, price, and age when determining premium prices.
“If you don’t want to pay a lot for car insurance, a good rule of thumb is not buying anything brand new and never owning a sports or luxury vehicle,” advised comparison website Ratehub.ca. “Some cars also have higher theft rates than others, which is one factor that is used to calculate your car insurance rates.”
The firm also suggested that drivers check out the Insurance Bureau of Canada’s (IBC) “How Cars Measure Up” tool, which compares vehicles in terms of their relative insurance costs and safety features, before buying one.
8. Maintain a good credit history.
In some provinces, auto insurers use a person’s credit history in calculating premiums as they see a correlation between a driver’s credit rating and the chances of them filing claims.
“Ensure good credit by paying your bills on time and try to resolve any delinquent accounts before requesting a car insurance quote,” RATESDOTCA advised. “The better your credit, the cheaper your insurance premium will be.”
9. Avoid letting a car insurance policy auto-renew.
A recent survey by Ratehub.ca has found that among the primary reasons why many Canadian drivers allow their car insurance policies to renew automatically is that they find the process of shopping around and applying for a new one arduous and time-consuming.
But while auto-renewal may seem like the easiest option, the firm says this option is not always the most cost-efficient.
Ratehub.ca estimates that a person could lose at least a few hundred dollars for failing to shop around for a new policy. This might not cost much in the short-term, but in the long run could reach thousands of dollars, especially with car insurance premiums across the country steadily rising.
10. Sign-up for usage-based insurance (UBI) or telematics.
UBI works by adopting onboard technology or mobile applications to monitor a policyholder’s driving habits and using the information gathered to reward safe drivers in the form of discounted premiums or, in some instances, penalize risky motorists in the form of surcharges.
Drivers can save between 10% and 30% on their annual car insurance premiums if the data gathered indicates that they practice safe driving habits.
The comparison website Lowestrates.ca describes usage-based auto insurance as a “great way to obtain cheaper [premiums]” as motorists “pay for the kind of driving you actually do, instead of the driving the insurance company thinks you do.” It added that because of this, cautious and careful drivers tend to pay lower rates.
11. Install safety features in the vehicle.
Many car insurance companies reward policyholders who have installed safety features, such as an upgraded alarm system and snow tires during winter, in their vehicles with discounts.
“Having an anti-theft device will help lower your costs and make your vehicle less of a target for thieves,” explained the independent insurance brokerage ThinkInsure. “Whether you have a high-tech alarm system that shuts down your fuel pump or starter motor, or a lower-tech visible ‘club-like’ theft deterrent, you will qualify for savings.
“Using winter tires, meanwhile, makes driving safer. It provides drivers with better traction, helps them stop quicker and more effectively in snowy conditions, and gives [them] peace of mind. Get up to 5% [discount] for using winter tires.”
12. Opt for annual payment.
Paying auto insurance as one lump sum rather than by monthly instalments can result in savings as policyholders can avoid being charged for interest or finance arrangement fees.
“Paying for your car insurance monthly can be beneficial, as it initially puts less financial stress on the policyholder,” Surex noted. “But if you pay for your car insurance on a monthly basis, you don’t get to take advantage of the potential savings.
“Car insurance companies prefer when policyholders pay for their coverage in one lump sum, as it negates the risk of the policyholder missing a payment. In turn, car insurance companies generally give drivers discounts if they pay for their coverage yearly.”
13. Be conscious of your mileage.
The more time a driver spends on the road, the higher the likelihood of them getting into an accident. This, in turn, drives up insurance premiums.
“Your commute time is often the biggest determining factor in your annual mileage,” RATESDOTCA noted. “If you switch jobs and don’t have to drive as far, or decide to start taking public transit, let your insurance company know. A seemingly small reduction in driving each week can add up to big savings.”
14. Be smart about what you claim.
Each claim can have an impact on car insurance rates at the time of renewal. Because of this, ThinkInsure advised policyholders to be smart and strategic about when and what to claim to protect their risk rating and future premiums.
“Remaining claims-free is important to capitalize on savings,” the brokerage explained. “Be strategic about filing smaller claims. Considering your deductible amount, does it make sense to file a claim and risk an increase? Always assess your options before deciding to file a car insurance claim.”
15. Take advantage of discounts
Car insurance providers offer a range of discounts, which motorists can take advantage of to reduce their annual premiums. According to RATESDOTCA, the key is to “ask and you shall receive.”
“While car insurance premiums are not negotiable, hidden savings are sometimes available if you are a member of an auto club (like the CAA), a unionised worker, or a university alumnus,” the firm noted. “Ask about group discounts for specific memberships and see if any apply to you.
“Not eligible for a group discount? Discounts are sometimes offered for other reasons, too. Owning a hybrid or electric car, getting a good grade point average, or being a retiree are all examples of other discounts available at some insurance companies.”