Auto Insurance In Ontario: Mandatory Coverage Explained

If you're planning to drive in Ontario, you need to know about the province's mandatory auto insurance requirements. Driving without insurance in Ontario is illegal, and doing so could cost you dearly in fines and the suspension of your driver's license. So, what auto insurance is mandatory in Ontario?

Third-Party Liability Coverage

In Ontario, it is mandatory to have auto insurance to drive a vehicle. One of the four types of mandatory car insurance in the province is third-party liability coverage. This type of insurance covers you if you cause an accident that hurts or kills another person or damages their property or vehicle. In other words, it protects you against the financial repercussions of being sued for physical injury or damage to someone else’s property.

Third-party liability insurance is the only type of car insurance that is mandatory across Canada. The law states that you must purchase third-party car insurance if you own a car. The minimum recommended amount is $200,000, but this may not be enough if you are sued for damages exceeding that amount. In Ontario, under FSCO rules, all drivers must carry at least $200,000 in third-party liability coverage. However, many people choose to carry more than this minimum amount, with some opting for coverage up to $2 million.

If you are involved in an accident, third-party liability insurance will cover the following:

• Medical fees for anyone's injuries (including pedestrians, cyclists, and fatalities)
• Repair costs to any vehicles you've damaged (except your own vehicle)
• Repairs or replacement for damage to other people's property
• Any associated medical costs because of the accident
• Lawsuits and legal fees
• Damages to any injured parties as a result of legal judgments against you

Third-party liability insurance does not cover the cost of any injuries or damage you have personally suffered due to an accident where you are at fault. For that, you would need additional insurance coverages such as accident benefits and collision coverage.

Statutory Accident Benefits Coverage

In Ontario, auto insurance is mandatory, and every vehicle registered in the province must be insured. The minimum coverage required by law includes Third-Party Liability Coverage, Statutory Accident Benefits Coverage, Uninsured Automobile Insurance, and Direct Compensation-Property Damage (DC-PD) Insurance.

Medical, Rehabilitation, and Attendant Care Benefits

For non-catastrophic injuries, the coverage includes up to $65,000 for medical, rehabilitation, and attendant care benefits. This can be increased to up to $130,000 or $1 million for combined coverage. For catastrophic injuries, the coverage includes up to $1 million, with the option to increase it to $2 million or $3 million. These benefits cover the cost of healthcare and rehabilitation services not covered by a private health plan or the government, such as physiotherapy, prescriptions, chiropractic care, and counselling.

Income Replacement Benefits

If you are unable to work due to your injuries, you may qualify for income replacement benefits of 70% of your gross income, capped at $400 per week. You have the option to increase this amount up to $1,000 per week.

Caregiver Benefits

If you are unable to provide care to your dependents due to your injuries, you may receive compensation to hire someone to help. This benefit is available for specific injuries, but you can add endorsements to include all injuries.

Non-Earner Benefits

If you do not qualify for income replacement benefits (for example, if you are a student), you may still receive non-earner benefits of $185 per week if you are unable to continue your daily life as before the accident.

Death and Funeral Benefits

In the event of the insured person's death due to an accident, the following benefits will be paid out: $25,000 to the spouse, $10,000 to each dependent, and a maximum of $6,000 for funeral expenses. These benefits can be increased to $50,000 for the spouse, $20,000 for each dependent, and $8,000 for funeral expenses.

Additional Benefits

Other expenses covered by Statutory Accident Benefits include lost educational expenses, reasonable expenses incurred by family and friends during visits during recovery, housekeeping and home maintenance expenses, damage to personal belongings, and the cost of examinations related to treatments.

Optional Benefits

You also have the option to increase the limits for income replacement, medical care, caregiver benefits, death and funeral benefits, and more. Optional benefits include dependent care benefits, indexation to adjust for inflation, additional medical expenses, and increased death and funeral benefits.

Direct Compensation, Property Damage Coverage

Direct Compensation-Property Damage (DC-PD) is one of the four types of mandatory car insurance in Ontario. It covers damage to your vehicle and its contents in the case of an accident for which you are not responsible. This means that if another motorist causes your accident, DC-PD insurance will pay for the damage to your vehicle and compensate you for its loss.

DC-PD is called "direct compensation" because you deal directly with your insurer for all no-fault insurance claims. You won't have to wait for the other driver's insurer to process your claim or sue the at-fault driver to recover damages. DC-PD is part of the no-fault system, which is a way to help streamline the claims process.

There are four criteria that must be met to use DC-PD insurance:

• Not at-fault: You must not be at fault for the accident.
• Vehicles involved: One or more vehicles must be involved in the accident.
• Insured: All vehicles that opt into DC-PD must be identified and insured.
• Location: The accident must happen within Ontario for DC-PD to come into effect.

It's important to note that 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. 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.

As of January 1, 2024, DC-PD insurance became optional in Ontario. By signing the OPCF 49 form, you can opt out of DC-PD coverage and save about 10% on your policy cost. However, opting out of DC-PD insurance could result in significant long-term costs if you're in an accident, as you would need to cover the repairs or vehicle replacement out of pocket.

Uninsured Automobile Coverage

Automobile insurance is mandatory in Ontario, but it is still possible to be involved in an accident with an uninsured driver. Uninsured Automobile Coverage is a mandatory aspect of car insurance in Ontario. This coverage protects you and your family in the event of an accident with an uninsured motorist or a driver who commits a hit-and-run. It also covers damages to your vehicle caused by identified uninsured drivers.

While this coverage is automatically included, it might not provide enough financial protection for you and your family. To increase protection, you can purchase Family Protection Coverage, which usually provides up to $1 million in additional coverage. This option can be particularly useful if the $200,000 limit does not fully cover your claim. For example, if you are in an accident with an uninsured driver who is at fault and the total damages are $550,000, the uninsured automobile coverage would pay only $200,000. If you have Family Protection Coverage, it would cover the remaining $350,000 in damages.

The Financial Services Regulatory Authority of Ontario (FSRA) regulates insurance in the province. It is recommended to use a licensed insurance company, agent, or broker to ensure you are meeting the mandatory insurance requirements in Ontario.

Additional Coverage Options

While the minimum coverage requirements for auto insurance in Ontario include third-party liability coverage, accident benefits coverage, uninsured automobile coverage, and direct compensation-property damage coverage, there are several additional coverage options available. These optional coverages can provide you with enhanced protection and benefits in the event of an accident or other incidents.

One such option is collision or upset coverage, which covers damages to your insured vehicle if it is involved in a collision with another vehicle, trailer, or other objects, including the ground. This can provide valuable protection if you are at fault for an accident, as you would not be eligible for direct compensation-property damage coverage in such cases.

Another optional coverage is specified perils coverage, which insures your vehicle against losses caused by specific events such as fire, theft or attempted theft, certain natural disasters, explosion, and civil disturbance, among other perils. This type of coverage can provide financial peace of mind in the event of unforeseen circumstances beyond your control.

Comprehensive coverage is another valuable option that covers the cost of repairing or replacing your vehicle from damage not caused by collision. This includes incidents listed under specified perils coverage, as well as other non-collision-related events. For example, if your vehicle is damaged by a falling tree branch during a storm, comprehensive coverage would come to your aid.

For even more extensive protection, consider all-risk (all perils) coverage. This combines collision or upset coverage and comprehensive coverage, providing a comprehensive safety net for various scenarios. Additionally, it covers loss or damage caused by theft by someone who lives in your home or has access to your vehicle, giving you extra security in case of familiar threats.

Lastly, you can also opt for additional third-party liability coverage, statutory accident benefits, and additional property damage insurance. These options increase your coverage limits and provide enhanced benefits for medical costs, income replacement, attendant care, housekeeping, funeral expenses, and more.

Frequently asked questions