Mandatory auto insurance coverage protects against personal injury and property damage. Across Canada, the minimum coverage required by law to purchase is also known as compulsory coverage. Provinces and territories set out the requirements for purchasing mandatory auto insurance coverage. In Ontario, you can buy from a private insurer. Whereas out west, government insurers are your only option. To drive in Ontario, what is the mandatory auto insurance coverage? What is the least amount of coverage you can legally drive with? Let’s find out.
Mandatory Auto Insurance in Ontario
Simply put, if you are an Ontario resident intending to drive, you are required to have auto insurance. The minimum requirement for a standard auto insurance policy in Ontario is:
- Third-Party Liability Coverage: Liability protects drivers from legal responsibility if they cause property damage or bodily injury to a third party. All drivers must carry a minimum of $200k in liability coverage.
- Direct Compensation – Property Damage (DC-PD): Covers damage to your vehicle, its contents, or the loss of use if another person was at fault for the accident
- Statutory Accident Benefits Coverage: Provides you with benefits if you are injured in an automobile accident, regardless of who causes the accident.
- Uninsured Automobile Coverage: Protects you and your family if you are injured or killed by a hit-and-run driver or an uninsured motorist.
Fines for vehicle owners, lessees, and drivers who do not carry valid auto insurance can range from $5,000 to $50,000. Your driver’s licence may be suspended and your vehicle impounded if you drive without valid auto insurance. Suppose you are convicted of driving without valid auto insurance. In that case, your insurance company may consider you a “high-risk driver” and charge you higher premiums or refuse to insure you entirely.
Non-Government-Regulated mandatory coverages
There are other instances when car insurance coverages are mandatory that aren’t government-regulated. One such scenario is if you lease or finance your vehicle. When leasing, you will need to meet the leasing company’s requirements. For example, the company loaning you money for the car will dictate requirements for auto coverage/policies. Since your leasing company still owns the vehicle, you must have specific coverage in place to protect the car. Leasing companies will require you to have comprehensive insurance and collision insurance. Collision coverage will protect the vehicle from damage, accidents, and fund repairs if you are at fault. Whether you lease or finance your vehicle, the lender will typically ask you to carry both collision and comprehensive insurance.
“One-Way” Insurance Coverage
If you’re trying to save money or you drive an older vehicle, you might want to pay less than the standard mandatory auto insurance premium. So, what is the most basic compulsory coverage in Ontario? A one-way car insurance policy is a basic type of auto insurance that includes limited coverage for liability ($200,000). In short, only damages you cause to others will be covered, and you will need to pay out of pocket for repairs to your vehicle. For example, in any scenario where your car may need a repair — such as an object falling on your vehicle or you colliding with another car and being at fault — there is no coverage in a basic policy. You will need to purchase optional coverages, such as collision and/or comprehensive coverage, or pay out of pocket.
The upside to one-way insurance? When it comes to how much money you’ll save with a one-way policy, that depends on your vehicle’s make and model. Drivers with more valuable cars tend to save more. A one-way policy can be up to 50% cheaper than a standard policy if your vehicle has a high replacement value.
A wide range of protection from accidents, automobile theft, vandalism, fire, or weather events will not be available to you with one-way insurance.
“In-Between” Coverage
Standard or “Two-Way” coverage provides greater protection. It covers both damage you may cause to others and damage to your vehicle. It also covers your vehicle in the event of a collision or rollover, as well as for other risks, like theft, vandalism, hail, or fire. However, if you’re driving an older vehicle, you may wonder if there is a “happy medium” between the two extremes of insurance coverage. If you want to save on your insurance policy without altogether insuring it one way, you can also choose “in-between” coverage. This means that you can guarantee your vehicle “one-way” in terms of civil liability, but you can choose to add coverage for events such as fire, theft, vandalism, and broken windows. This allows you to reduce your insurance premium by removing just one part of the coverage, specifically collision and comprehensive coverage.
Opting Out of DCPD
Ontarians can now choose to opt out of DCPD coverage on their auto policy. The OPCF 49 Endorsement stipulates that in the event of a collision where you are at fault, you can choose not to receive compensation for costs from the accident.
The OPCF 49 form states: “Not being compensated means you will not be reimbursed for any loss or damage to the described automobile, including”:
- Repair costs
- The value of the vehicle
- The loss of use of the vehicle
- A replacement for the vehicle
- Loss or damage to any one of the vehicle’s contents
While doing so will provide a premium discount, the trade-off of less coverage may not be worth it in many cases.
Mandatory Auto Coverage: A Wrap-Up
If you want to pay as little as you can for auto insurance, it means that you are restricting the coverage available to you. Basic or mandatory auto insurance coverage includes the four staples of car insurance: liability, accident benefits, DC-PD, and uninsured drivers. There are, however, other options that you may want to consider. However, please don’t cut coverage unless you first speak with your insurance company or isure representative.
Unsure of what your policy covers? We have a list of items that are not covered by your standard auto insurance policy. This can provide you with the facts about how your coverage will look if you opt for basic coverage. Soaring gas prices and living expenses are enticing to “trim the fat” on your insurance policy. Just be sure you understand your auto insurance needs before you do. An isure representative will be happy to help walk you through this.
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