How much car insurance do you really need in Canada?
By: Mike Friskney and Aya Alhakim on August 24, 2026
Updated by Aya Al-Hakim on August 24, 2026 | Originally written by Mike Friskney on June 19, 2023
KEY TAKEAWAYS:
- Most Canadian drivers carry between $1 million and $2 million in third-party liability coverage; minimum insurance requirements vary by province and territory.
- Third-party liability coverage is mandatory across Canada, while collision and comprehensive coverage are generally optional unless your vehicle is leased or financed.
- Collision coverage helps pay for damage to your vehicle after an accident, while comprehensive coverage protects against theft, vandalism, fire, hail, flooding, and other non-collision related losses.
- Optional endorsements such as rental vehicle coverage, accident forgiveness, and enhanced accident benefits that insurers recommend can provide additional financial protection beyond a standard auto insurance policy.
- Ontario drivers should review their policies carefully following the July 1, 2026 auto insurance reforms, which made several accident benefits optional that were previously mandatory.
Most Canadian drivers should carry at least $1 million to $2 million in third-party liability coverage. Collision and comprehensive coverage are also worth considering if your vehicle would be expensive to repair or replace. Following auto insurance reforms in Ontario, insurers recommend having optional accident benefits that were previously mandatory. The right amount of car insurance depends on your province, vehicle value, budget, and risk tolerance.
Car insurance is mandatory for every driver in Canada. Figuring out what kind of coverage you need, and how much, depends on where you live, the car you drive, and what risks you're willing to carry.
In this article:
What car insurance coverage options are available in Canada?
Most Canadian drivers have three main types of car insurance coverage: third-party liability, collision coverage, and comprehensive coverage.
Third-party liability insurance is mandatory across Canada. In most provinces, collision and comprehensive coverage are optional, except Manitoba and Saskatchewan, where both are bundled into the mandatory public insurance plan. Collision and comprehensive can often be required if you lease or finance your vehicle.
Canadian auto insurance is typically built around these three coverage types, with additional protection available depending on your province and insurer.
1. Third-party liability coverage
Third-party liability coverage is legally required in every province and territory in Canada. However, the minimum amount of coverage required varies depending on where you live.
A standard policy also includes two other protections that come bundled with liability coverage:
- Statutory accident benefits cover medical, rehabilitation, and attendant care costs if you’re injured in a collision, regardless of fault. Note for Ontario drivers: As of July 1, 2026, some accident benefits that were previously mandatory, including income replacement, caregiver benefits, and home support, are now optional add-ons. If you’re in Ontario, review your policy carefully to understand your coverage.
- Depending on your province, your policy may also include Direct Compensation–Property Damage (DCPD) or similar coverage that helps pay for damage to your vehicle when another driver is at fault.
2. Collision coverage
Collision coverage pays for damage to your vehicle when you hit another car or object, such as a guardrail, concrete barrier, or parked car. It’s optional if you own your car outright, but typically required if you’re financing or leasing a vehicle.
A good rule of thumb is that collision coverage may no longer be cost-effective when your annual premium approaches market value of your vehicle. If your car was written off after a crash, your insurer would reimburse only its current value, which may not justify your cost of buying coverage.
For example, if replacement costs of your car is $2,000, and you’re paying $2,500 for collision insurance each year, it’s not worth having the coverage.
3. Comprehensive coverage
Comprehensive coverage pays for damage to your vehicle unrelated to driving, such as theft, hail, flooding, or fire. It offers the broadest protection for your vehicle.
Comprehensive coverage is usually worth considering if replacing your vehicle after a theft, fire, hailstorm, flood, or other covered event would create financial hardship.
As with collision coverage, compare annual premiums to your vehicle’s value. If the premium equals or exceeds 10% of your vehicle’s cash value, this coverage may not be optimal for you.
What's mandatory (and what's optional) in your province
| Province / territory | Minimum liability | Accident benefits | Uninsured motorist | DCPD | Collision & comprehensive | Insurance model |
|---|---|---|---|---|---|---|
| AB | $200,000 | Required | Not required1 | Optional2 | Optional | Private |
| BC | $200,000 | Included | Included | Included | Optional | Public (ICBC) |
| MB | $500,000 | Bundled3 | Bundled3 | Bundled3 | Required | Public (MPI) |
| NB | $200,000 | Required | Required | Required | Optional | Private |
| NL | $200,000 | Optional | Required | Required | Optional | Private |
| NS | $500,000 | Required | Required | Required | Optional | Private |
| NT | $200,000 | Required | Required | N/A | Optional | Private |
| NU | $200,000 | Required | Required | N/A | Optional | Private |
| ON | $200,000 | Optional4 | Required | Optional2 | Optional | Private |
| PE | $200,000 | Required | Required | Required | Optional | Private |
| QC | $50,000 | SAAQ5 | — | Required | Optional | Hybrid (SAAQ + private) |
| SK | $200,000 | Bundled3 | Bundled3 | Bundled3 | Required | Public (SGI) |
| YT | $200,000 | Required | Not required | N/A | Optional | Private |
1 Alberta has no mandatory uninsured motorist coverage. Uninsured driver claims are handled through the provincial Motor Vehicle Accident Claims (MVAC) program.
2 DCPD is included by default in AB and ON but drivers may opt out. Five provinces have DCPD as fully mandatory with no opt-out: QC, NS, NB, NL, PE.
3 MB (Autopac/MPI) and SK (SGI plate insurance) use government all-in-one plans that bundle injury, property damage, and liability. Separate coverage categories do not apply.
4 Ontario: as of July 1, 2026, most accident benefits are optional. Some core benefits (medical, rehabilitation, attendant care) remain mandatory.
5 Quebec: bodily injury covered universally by SAAQ (included in licence fees). The $50,000 minimum is civil liability (property damage), purchased privately.
Sources: Insurance Bureau of Canada (IBC); ICBC (BC); Manitoba Public Insurance (MPI); Saskatchewan Government Insurance (SGI); Financial Services Regulatory Authority of Ontario (FSRAO); Financial and Consumer Services Commission (FCNB, NB); Government of Newfoundland and Labrador; Government of Nova Scotia; Government of Prince Edward Island; SAAQ / BAC-Quebec (QC); Government of Alberta; Government of Northwest Territories; Government of Nunavut; Government of Yukon
Read more: How Ontario’s July 1, 2026 auto insurance reforms affect drivers and non-drivers
How much car insurance coverage do you need?
Most drivers should carry $1 million to $2 million in third-party liability coverage, even if their province or territory requires less.
Collision and comprehensive coverage add to your monthly premium, but they can also protect you from costs far greater than what you’d pay out of pocket after an accident, theft, or weather event. The table below shows how your premium changes when you add each coverage type—not as a reason to skip them, but so you know what to expect.
| Coverage selection | Estimated monthly $difference |
|---|---|
| Basic without collision or comprehensive | — |
| Basic + collision only | +~$55 |
| Basic + comprehensive only | +~$70 |
| Basic + collision + comprehensive | +~$135 |
Source: Lowestrates.ca. Based on a 35-year-old male driver in Toronto (M6H 1X1), clean driving record, one-year-old owned Honda Civic EX, $1M third-party liability. Figures rounded to nearest dollar.
For collision and comprehensive coverage, the right amount depends on your vehicle’s value and whether you could afford to repair or replace it out of pocket.
Read next: Everything you need to know when buying car insurance
Should you add optional car insurance coverage?
Optional car insurance coverage can help pay for expenses that aren’t covered by a standard auto policy. Common add-ons in Canada include rental vehicle coverage, accident forgiveness, and, in some provinces, enhanced accident benefits.
Depending on your circumstances, the coverage included in a standard auto insurance policy may not provide all the protection you need. Optional coverage, also known as endorsements, allows drivers to customize policies based on financial situation, driving habits, and day-to-day transportation needs.
| Car insurance add-on | What it covers | Best for |
|---|---|---|
| Rental vehicle coverage | Insures a temporary vehicle while your car is being repaired following a covered claim | Drivers who rely on their vehicle every day |
| Accident forgiveness | Protects against a premium increase after first at-fault accident, subject to insurer rules | Drivers with a clean driving record |
| Optional accident benefits | Provides access to benefits such as income replacement and caregiver support after an accident | Drivers who want additional financial protection |
| Other endorsements | Expands coverage for specific needs and risks | Drivers looking for more tailored protection |
Rental vehicle coverage
Rental vehicle coverage can help pay for temporary transport while your car is being repaired after a covered claim. This endorsement can be particularly useful if you don’t have access to another vehicle.
Accident forgiveness
An accident forgiveness waiver can prevent your premium from increasing after your first at-fault collision. However, this protection is generally tied to your insurer. If you switch providers, a new insurer may still factor the at-fault collision on your driving record into your premium calculation.
Optional accident benefits
Some provinces offer additional accident benefits that can help cover expenses following a serious injury. These benefits may include income replacement, caregiver support, housekeeping assistance, and other forms of financial protection.
Ontario drivers should pay particular attention to these options. Following the province’s auto insurance reforms that took effect on July 1, 2026, accident benefits that were previously mandatory became optional coverage choices. Drivers who opt out may save on premiums but could face higher out-of-pocket costs after a serious accident.
Other endorsements
Drivers can also add endorsements such as loss of use coverage, a depreciation waiver, and family protection coverage. Availability and naming conventions vary by province and insurer.
Comparing auto insurance policies from different providers ensures you’re getting the lowest rates for your coverage requirements.
Read more: What is an insurance endorsement or rider?
Frequently asked questions (FAQ)
Is collision coverage mandatory in Canada?
Collision coverage is optional in most provinces if you own your vehicle outright. The exceptions are Manitoba and Saskatchewan, where it’s bundled into the mandatory public insurance plan. In all other provinces, it’s typically required only if you’re financing or leasing your vehicle.
What does comprehensive car insurance cover?
Comprehensive coverage pays for damage to your vehicle unrelated to driving, including theft, vandalism, fire, hail, and flooding. It does not cover damages related to a collision.
What optional coverage can I add to my car insurance policy?
Common optional endorsements in Canada include rental vehicle coverage, accident forgiveness, and enhanced accident benefits. Other add-ons such as loss of use coverage, a depreciation waiver, and family protection coverage may also be available depending on your province and insurer.
How do Ontario's 2026 auto insurance reforms affect my coverage?
As of July 1, 2026, several accident benefits that were previously mandatory in Ontario—including income replacement, caregiver benefits, and home support—are now optional add-ons. Ontario drivers who opt out may save on premiums but could face higher out-of-pocket costs after a serious accident. Review your policy carefully to understand what you’re still covered for.
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