Auto Insurance In Ontario: What's Mandatory?

Auto insurance is mandatory in Ontario, and while the type of insurance you get depends on your specific needs, there are four types of mandatory car insurance in the province. These are automatically included in any car insurance policy you purchase, but the coverage amount will vary depending on your unique situation. These four types are: Third-Party Liability Coverage, Accident Benefits Coverage, Uninsured Automobile Coverage, and Direct Compensation-Property Damage Coverage.

Third-Party Liability Coverage

In Ontario, drivers are required to carry a minimum of $200,000 in third-party liability coverage, though it is recommended that they opt for at least $1 million in coverage. This type of insurance covers you if you cause an accident that hurts or kills another person or damages their property. It is important to note that third-party liability coverage does not cover the cost of repairs to your own vehicle.

Third-party liability insurance is a type of coverage that financially protects you if you are considered responsible for damages or injuries to another person or their property. This coverage is available for both home and car insurance policies, but it is mandatory to have it on your car insurance policy to drive in Canada. The minimum amount of coverage required varies by province or territory.

It is always a good idea to discuss your auto insurance needs with your insurer to ensure you have sufficient coverage. While the unexpected can happen to anyone, your insurer can help you determine if your third-party liability coverage limit is enough or if you need more.

Accident Benefits Coverage

The Statutory Accident Benefits Schedule (SABS) outlines the mandatory and optional limits for medical care, income replacement, death, funeral expenses, and loss of income from disability.

Standard Accident Benefits Coverage in Ontario includes:

• Income Replacement, Non-Earner, and Caregiver Benefits
• Medical, Rehabilitation, and Attendant Care Benefits
• Death and Funeral Benefits

You can also purchase enhanced Accident Benefits Coverage to increase these limits and add additional benefits.

Uninsured Automobile Coverage

In Ontario, uninsured automobile insurance is mandatory and covers you in the event that you are struck by an uninsured motorist or a hit-and-run driver. This type of insurance will also pay benefits to families who lose a loved one in an accident caused by an uninsured or hit-and-run driver.

Uninsured motorist coverage is a type of car insurance that can pay for medical expenses if you or your passengers are injured in an accident caused by a driver without insurance, a hit-and-run driver, or a driver whose insurance company denies coverage or goes out of business. It can also cover lost wages if you are unable to work due to the accident. It is important to note that uninsured motorist coverage does not pay anything to the driver who was uninsured; it pays you.

In some states, you can also purchase uninsured motorist property damage coverage, which pays for damages to your car if it is hit by an uninsured driver. However, collision coverage, which is optional and available in every state, can also cover vehicle damage, regardless of whether the person who hit you is insured or not.

Uninsured motorist coverage is typically expressed as two numbers, such as 100/300, which translates to $100,000 in bodily injury coverage per person and $300,000 in bodily injury coverage per accident. The cost of uninsured motorist coverage varies but averages around $136 per year.

While uninsured motorist coverage is mandatory in Ontario, there are other types of auto insurance that are also mandatory. These include third-party liability insurance, accident benefits insurance, and direct compensation-property damage insurance.

Direct Compensation-Property Damage Coverage

Direct Compensation-Property Damage (DCPD) is a mandatory component of auto insurance in Ontario. It covers damage to your vehicle and/or its contents if you are deemed not at fault in an accident. This means that if you are in a car accident where the other driver is at fault, DCPD ensures that you will be compensated directly through your own insurance company.

DCPD is part of the no-fault system, which means that regardless of fault, you deal with your insurer. This speeds up the process of receiving payment for your claim. Before the introduction of DCPD, you would have to wait for all the insurance companies involved to decide who was at fault for the accident before receiving payment.

DCPD will only apply if the following four conditions are met:

• You are not at fault for the accident.
• The accident happens in Ontario.
• At least two vehicles were involved in the accident.
• The parties involved in the accident are insured by companies licensed in Ontario.

Hit-and-run accidents are not covered by DCPD. In this case, your claim will be paid out through your auto insurance policy.

DCPD does not remove the concept of fault from loss recovery, and it does not change your right to sue for other damages. Most people carry a $0 deductible on DCPD because they do not want to pay anything for a collision that is not their fault.

As of January 1, 2024, DCPD coverage will become optional in Ontario. By adding the OPCF 49 endorsement, you can choose to opt out of DCPD. However, removing DCPD can pose a significant risk as you may have to pay for vehicle repairs and replacements out of pocket.

Collision or upset coverage

It is important to note that collision or upset coverage does not include damage when something hits you, such as a tree branch falling on your car. In these cases, comprehensive coverage, which is also optional, will provide protection.

When deciding whether to add collision or upset coverage to your policy, consider your financial situation. If you can afford to repair or replace your vehicle yourself, then you may not need this additional coverage. Additionally, if your vehicle is old and not worth repairing in the event of a collision, this coverage may not be worth the cost.

Frequently asked questions