Insurance in Ontario: mandatory and additional coverage options
In Ontario, the provincial law requires that all drivers have auto insurance. Auto insurance first became mandatory around 1927 in the U.S. and continued throughout Canada, with Saskatchewan becoming the first province to offer government-run auto insurance in the 1940s.
Unlike in British Columbia, Manitoba, Quebec, and Saskatchewan, where residents can opt for public insurance, in Ontario and the Atlantic provinces, car insurance can only be purchased via a private insurer.
Any vehicle owners, lessees or drivers who are found to not be carrying valid auto insurance can be fined anywhere from $5,000 to $50,000. Furthermore, they can have their licence suspended and their vehicle impounded.
If you do find yourself convicted of driving without valid auto insurance, insurers in the future may consider you high risk, and charge you higher premiums; or, they may just refuse to insure you at all.
Each province sets their own insurance laws, but Ontario has some of the most complex regulations, and often most expensive policies, in the country.
In most cases you can tailor your insurance policy to match your individual needs, which in turn can have an effect on how much you pay; however, some coverage options are mandatory in Ontario. To try and help clear things up, we categorised the mandatory coverage that you must have to drive in Ontario and outlined some additional extras you might want to consider:
Mandatory Coverage
There are several types of coverage that Ontario law requires insurers to provide. If you own a vehicle in the province, you are required to purchase the following auto insurance coverage:
Third-party Liability Coverage
Third-party liability coverage addresses issues for you, as a driver, covering the injury, personal property damage, or death of someone else as the result of your driving. The coverage includes lawsuits and settling claims. By law, you must carry a minimum of $200,000 in coverage across Canada; however, options exist to increase the minimum amount, and most drivers opt for $1 million in liability coverage. If you find yourself in a difficult situation without enough coverage, the financial damage can be devastating.
Statutory Accident Benefit Coverage
Statutory accident benefit coverage is the part of your policy which helps you if you find yourself injured in a car accident, regardless of who is at fault. Most coverage will supplement any medical treatment you need as a result of your accident, as well as covering the cost of caregivers and rehabilitation when you file a claim. It should also make up for any income lost if you have to take time off work to recover; usually, this is around 7% of a wage up to $400 per week.
This type of coverage is governed by the Statutory Accident Benefits Schedule, which is made under the Insurance Act of Ontario.
Direct Compensation Property Damage Coverage
Direct Compensation Property Damage (DCPD) covers damage or loss to your vehicle and its contents if it was the fault of someone else. The reason this type of coverage gets its name is that you deal with your own insurance company directly for your claim, regardless of who was at fault.
Within Ontario, there are certain criteria that must be met in order to make your DCPD claim valid:
Your accident must have taken place in Ontario.
There must have been, at least, one other vehicle involved in the accident.
At least one of the other vehicles involved in the accident is also insured in Ontario or has an insurer who has signed an agreement with FSCO to provide this level of coverage.
If you do not have DCPD it is possible to make a claim on the responsible driver’s insurance. Some drivers choose to purchase additional coverage to protect them against accidents that happen outside of Ontario, or in situations where the at-fault driver is uninsured.
Uninsured Automobile Coverage
Uninsured automobile coverage steps in when a passenger is injured or worst case scenario, killed, in a hit and run incident, or by an uninsured motorist. Benefits can also be paid out to the family of a victim in such unfortunate situations.
Additional Coverage Options
As well as the mandatory coverage expected of all drivers in the province, most insurers will allow you to raise the limit of any of these options, as well as purchase extra coverage which could save you money in the long run.
Adding any of these coverages will affect the price you pay overall for your auto insurance; however, you have the flexibility to make the payout limit of each rise or fall.
When it comes to optional coverage, there are usually two main categories: collision and comprehensive. Collision tends to outline damage caused to the car while it is being driven. In most cases, this is the result of a crash. Comprehensive covers any damage or loss. For the most part, this is the result of fire, theft, vandalism or extreme weather.
You are not obliged to purchase any of the following options, although, they will strengthen your policy.
Top-up Income Replacement Benefits
Although you are covered for 70% of your gross income up to $400 as part of your mandatory coverage, you may discover that this is not enough to cover your wages after tax. In this situation, an additional top-up purchase to increase your maximum weekly benefit may be the most useful option.
Medical or rehabilitation cover
While you are covered by OHIP in Ontario, you should remember that there are a lot of medical and rehabilitation expenses that your provincial health care does not cover. Think physiotherapy, chiropractic treatment, mobility devices like wheelchairs, home modifications to benefit your quality of life during recovery, and other specialized goods and services. An additional add-on will boost the amount you are covered for in terms of medical expenses, as well as offer some wiggle room to help support any attendant care expenses your rehabilitation period may incur.
As you might expect, the more serious an injury is, the more expensive it will be to get you back on your feet again.
In fact, a catastrophic injury costs a standard maximum of around $1,000,000. Cashing out for a policy add-on upfront will benefit you in the long run-should you be unfortunate enough to find yourself seriously injured and in need of 24-hour rehabilitative care.
Review any extended health care plan that you currently have in place, such as through your employer, to decide if it is worth investing in extra coverage.
Caregiver support
Are you a parent or the main caregiver of a dependent, such as a child or ageing loved one? Consider what would happen if you were injured in an accident; chances are you wouldn’t be able to provide the usual level of care for your dependent during your recovery process. Caregiver benefits allow you to hire someone to help out during this time.
This type of coverage can only be claimed by someone who is seriously injured in an accident but is a good thing to consider when purchasing or renewing your policy.
Housekeeping expenses
Similarly, if your injury leaves you unable to maintain your home, you could qualify for support to help cover the cost of hiring an individual to help you out. The maximum benefit payment for this is around $100 per week, and can only be claimed if you are seriously injured in your car accident.
This is, again, something to consider if you live in a home with dependents where you are the person responsible for maintaining a safe, comfortable living environment.
Additional property damage insurance
While your DCPD coverage is a major help when you're not the one at fault in an accident, what happens if you are found to be at fault? In that case, you could end up paying seriously out of pocket while you try and cover the cost of damaged vehicles or property caused by the incident.
In a bid to avoid any painful expenses, some people opt for additional insurance that covers them should they be found at fault.
Loss of vehicle use
If your car needs to be repaired and you are left without a car, this can be a huge setback in getting to and from work, doing the school run, and completing day-to-day tasks. Your insurer can help to cover the cost of getting a rental vehicle, or supplementing an alternative mode of transportation if you opt for this type of coverage.
Perils
The type of coverage you get for perils can be separated into two categories: “specific perils” and “all perils”. It is your decision which option you decide upon.
Specific Perils
Specific perils will see your insurer pay out only for those risks that you listed in your policy. This can be useful if you live in an area with a high crime rate, or somewhere that often experiences extreme weather. Most often specified perils include things such as:
Fire
Theft or attempted theft
Lightning
Hail
Rising water
Earthquake
Windstorm
An explosion, riot or civil disturbance
The falling or forced landing of aircraft or parts of aircraft
The stranding, sinking, burning, derailment, or collision of any kind of transport in, or upon which, a described automobile is being carried on land or water
All Perils
As you may have guessed, 'all perils' simply means that you are listed against all of the options stated above. Although usually, this will cost you more than specific perils coverage, it will also have your back in pretty much any scenario.
Death and funeral expenses
No one wants to think about what would happen if they died unexpectedly, but it's kind of important that you do so that your loved ones are not left grieving and with a long list of expenses. In the event that you do die as the result of an auto accident, by incorporating this into your policy, your insurer will pay out to help cover some of the costs of passing.
There are plenty of insurers out there who offer all kinds of packages, so search the market and consider if any additional extras will be beneficial to you.