Auto insurance FAQ

Even if you know the basics of car insurance, we know there are probably still a few questions you may have. Check out our FAQ’s below.

Do I really need auto insurance?

Yes – in Canada, it’s the law: your vehicle has to be insured. The exact requirements vary from province to province, but every jurisdiction mandates a minimum amount of liability insurance. Most drivers should invest in a broad spectrum of insurance, not just liability, so that they’re protected in the event of unexpected, unavoidable scenarios, like an accident, fire, or theft. After all, bad things can happen to anyone.

What is no-fault insurance?

A type of insurance system used by providers in several provinces, like Ontario and Alberta. Under the no-fault insurance system, you skip the hassle of pursuing the at-fault driver’s insurer to get compensation. Instead, your own provider pays out your benefits, which usually means you get quicker and more convenient service.

But who’s at fault in an accident still matters. If you’re found at fault, that verdict goes on your record and your insurer could raise your premiums.

What is an auto insurance deductible?

The amount of money that you must pay out of pocket to cover damages. Your insurance provider will pay for all covered costs beyond your deductible. For example, if your policy has a $500 deductible, you would pay the first $500 of your claim, and your insurance company would pay the rest, up to a pre-determined maximum amount.

So, naturally, your deductible impacts your car insurance rate. When you commit to a higher deductible, your provider doesn’t have to contribute as much money to your claims. As a result, your premium lowers.

How do providers determine insurance premiums?

They evaluate a long list of variables, including your age, commute, and driving record. Insurers also consider the make, model, horsepower rating, and safety features of your vehicle before calculating your rate.

Try our auto insurance comparison service if you want to shop for the lowest rates. Just plug your information into our quoter -- even though insurers have access to all the same info, you’ll notice that each one offers a slightly different rate.

Does my marital status impact my auto insurance premium?

It could. In certain provinces, namely Ontario, insurers are allowed to use your marital status to set your premium. But there’s no real way to determine how much weight your insurer puts into it. Some use it, while others don’t.

Do I get an automatic discount on my car insurance when I turn 25?

It’s a myth — you won’t magically get a discount at the stroke of midnight on your 25th birthday. But it has persisted because, statistically speaking, most drivers see their insurance rates steadily fall throughout their twenties. This trend is prevalent among drivers who’ve been insured since the age of 17 (when they first earned their licence) and have a good driving record. However, we discovered that the most significant drop in annual premiums actually occurs around age 21.

Young people pay more for car insurance. It’s an unavoidable fact. Your driving history, the type of vehicle you own, and the insurance company you choose also play a big part in determining your premium.  

If I have to make to make a claim or make a change to my auto insurance policy, do I contact the broker that sold me the policy or the insurance company?

If you’ve purchased insurance from a broker, you should file your claim through them. Your broker’s job is to act as your advocate should the insurance company try to dispute your claim. Your broker will help you gather all the information you need to make the report and submit it to the insurance company. If you need to file a claim, don’t hesitate — get in touch with your broker immediately.

How soon before my renewal should I shop for insurance and how long is the quoted rate valid?

Your auto insurance provider will send you paperwork a few weeks before the renewal date — this is generally a good time to start shopping around for rates.

That said, you don’t have to wait until your policy is close to expiring. Seeing what’s out there at any point of your contract is a good idea. Although they are subject to provincial regulatory oversight, insurance rates are not determined by the free market. Each company uses its own claims history to set rates (though provincial governments have a major hand in regulating rates; take the Financial Services Commission of Ontario, for instance), so you could very well be paying too much.

As for how long quotes are valid for, that varies company by company. However, any deadlines should be prominently displayed, and when quotes do expire, you should not have any difficulty getting a new one.  

I’m moving to a new province — what do I do about my car insurance?

Moving provinces can be an exciting — and daunting — experience. The good news is that applying for a new car insurance policy isn’t something you need to cross off your to-do list until your move is officially complete. In fact, you’ll want to keep your insurance current until the move is complete. Here’s how you can prepare:

  • Contact your insurance company and ask for a claims experience letter. This report documents your claims history and you’ll want to have this on hand to show an insurer. It usually takes a week to arrive in the mail. You could do this before or after the move.
  • Get a new driver’s licence once you’ve moved in. Every province gives you a limited timeframe to exchange your old licence for a new one.
  • Determine the minimum insurance needed in your province.
  • Compare rates — this is a perfect time to see if you’re getting the best value.