Car Insurance in Ontario is required by law, this is a fact. However, did you know that only certain types of car insurance are mandatory, while some are optional? Do you know what is required of you as opposed to what you should purchase in addition to the minimum mandatory coverage? In this article, we will break down the minimum legal requirements, the optional coverages you should have, as well as the coverages that are nice to have. We will also discuss their impact on auto insurance rates and how to make sure you have the right amount of coverage. Not too little, not too much, just right.
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Mandatory Car Insurance in Ontario
Here are the minimum legal required coverages you must have to drive in Ontario:
- Third-Party Liability Coverage: In Ontario, various types of car insurance policies are available, each with its own set of benefits and limitations. This coverage comes standard with every auto insurance policy and is a must-have, you don’t have a choice. Third-Party Liability coverage in Ontario protects you from damages you may cause, including injury to others and property damage. The minimum amount of coverage in Ontario is $200k, however, is highly recommended and normally sold at a minimum of $1million or $2million in coverage. The difference between $1million and $2million in coverage is approximately $50 annually and highly recommended.
- Direct Compensation Property Damage (DCPD): Otherwise known as No-Fault Insurance, this coverage responds when someone crashes into your vehicle and it is determined you are not at fault. Damage to your vehicle is covered with no deductible. It is called “No-Fault” because even though the other person is at fault you may call your own insurance company to cover the damages rather than chasing the third party and their insurance company. Even if you have an older vehicle that is not worth insuring you still must have this coverage and it comes standard on every Ontario auto insurance policy. However, Effective January 1, 2024, the new OPCF 49 endorsement now allows Ontario drivers to opt out of DCPD coverage, aiming for greater flexibility in insurance costs, which means it is technically now optional. However, Begin Insurance recommends maintaining DCPD for comprehensive accident protection without stress. Opting out with OPCF 49 could lead to financial risks in no-fault accidents. Hence, you still see it under mandatory section. For an in-depth analysis of OPCF 49, see our detailed discussion How Will OPCF 49 Impact Your Car Insurance in Ontario?
- Uninsured Auto: This covers you for any bodily injury to yourself or damage to your automobile caused by someone who is uninsured or leaves the scene of an accident in a “hit and run”.
- Accident Benefits: Another mandatory coverage by law although you may choose to upgrade from minimum coverages. It consists of the following:
- Medical, Rehab and Attendant Care
- Income Replacement
- Caregiver or Dependant
- Funeral expenses and Death Benefit
- Family Protection Coverage (OPCF 44): This coverage bumps up your third-party liability limits if are ever involved in an accident with someone who is underinsured or is not insured. Basically, it protects your family by allowing you to sue and recover money from others who didn’t buy enough insurance.
Some of the misconceptions about mandatory car insurance is that it is far too expensive, especially if your vehicle is older. Several factors influence your car insurance premiums in Ontario, including your driving record, type of vehicle, and chosen coverage. Understanding these can help you find ways to reduce your insurance costs. While the car insurance may be expensive, keep in mind that most of this coverage is for your own bodily injury or the injury you cause to others. After all, cars can be replaced but people need to be cared for and this is why these coverages are mandatory by law.
Optional Car Insurance in Ontario
Here are the optional coverages you may purchase for your Ontario auto insurance policy:
- Collision Coverage: This coverage is for damage to your own vehicle. If you hit another vehicle or object and cause damage to your car this coverage will pay for the damage, minus your deductible. Common deductibles nowadays are $500 or $1000. Consider a $1000 deductible if you want to save $100 or more per year.
Here’s an example of a collision claim in Ontario:
Vehicle damage to your car: $10000
Percentage at fault: 100% your fault
Deductible: $1000
Collision payout by Insurance Company: $9000
Total Payout: $9000 on a $10000 claim
Here’s another example including Collision and DCPD with 50/50 at Fault:
Vehicle damage to your car: $10000
Percentage at fault: 50% your fault
Deductible: $1000 (you owe 50%)
Collision payout by Insurance Company: $4500
DCPD Payout by Insurance Company: $5000
Total Payout: $9500 on a $10000 claim
- Comprehensive Coverage: Covers the cost of damage to your own vehicle from non-collision related accidents such as theft, vandalism, fire, hitting an animal, etc. Also subject to a recommended deductible of $1000 or $500. There are some exclusions such as theft by someone who resides in your own home, theft by a mechanic.
- All Perils Coverage: It’s basically Collision and Comprehensive combined and removes the exclusion for theft from people in your home. It also tends to be a few dollars cheaper for some reason. This is the smart move to purchase rather than collision and Comprehensive.
- Loss of Use (OPCF 20): In the event of an accident where you need a rental car while your car is being fixed or replaced, the OPCF 20 coverage provides you with a rental, up to a specific limited dollar amount.
- Limited Waiver of Depreciation (OPCF 43): If your vehicle is new you’ll want to cover it for depreciation in the event of a loss. This coverage does just that for a specified period of time. While this coverage isn’t mandatory for newer vehicles, it may as well be. It’s a must have for newer owned or leased vehicles.
- Accident Waiver, Accident Forgiveness: If you have a good driving record with no recent claims you may want to purchase Accident Waiver coverage. In the event of your first At-Fault accident this coverage would essentially “forget” that a claim happened, allowing for your rates not to increase as a result. It’s essentially insurance on insurance. It’s important to note that this is not transferrable to another insurance company, meaning that only your current company will “forgive” the accident.
- Emergency Roadside Assistance (OPCF 35): This coverage responds in the case you are in an accident and need a tow or assistance. The cost for the tow will be covered by your insurance company. Note that this only applies to insured losses such as an accident. The cost is often $25 - $50. If you already have a membership with a roadside assistance plan such as CAA then this coverage really isn’t necessary.
There are a plethora of additional optional coverages for your Ontario Car Insurance policy but we’ve covered the main ones here. For each of the optional coverages it is important to look at your own particular needs and assess whether you would benefit from these coverages or not. Ask yourself; do I need a rental car to get to work? Do I already have roadside assistance? Do I have a good driving record worth protecting? If I get in to an accident can I buy another vehicle with the insurance money or can I go without coverage and buy my own car? It’s questions like these that are often best discussed along with an insurance broker to get the right price and coverage. Ready to take the next step? Get a personalized quote in as less as 30 seconds!
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For a quick visual summary of the key points discussed in this article, take a look at our infographic below. Don’t forget to share it if you find it useful.
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Posted May 10, 2019