Calling the first car insurance company you see on TV or picking your relative’s provider won’t necessarily buy you the best car insurance. That’s because car insurance companies rate every driver differently, using several factors like your age, home address, and driving history — details which are unique to you.
Therefore, the company that provides the best auto insurance rate for your mom, friend, or boss may not be the best fit. But doing your research and comparing car insurance quotes from multiple providers can save you money on the coverage you need.
What is car insurance?
Car insurance is a legal contract between you and an insurance company that protects you against financial loss in the event of a collision, property damage, theft, or personal injury to you, your passenger, or another driver. Drivers must have it in Canada — it’s the law.
How to buy car insurance
Depending on the province or territory in which you live, you will buy auto insurance from either a public or private insurance company.
Provinces like British Columbia, Manitoba, and Saskatchewan operate public insurance systems. That means drivers buy their basic insurance through a Crown Corporation owned by the province. Drivers can usually purchase optional coverage from the public system or a private insurance company. Whereas residents of Ontario or Alberta, for example, buy their entire auto insurance policies from private companies.
If you’re wondering how to get car insurance in your province, you need to understand the insurance system it operates under. Residents using public insurance systems, for instance, speak to an insurance agent or direct writer from the Crown Corporation. In a private insurance system, drivers can choose to buy car insurance from an agent or direct writer — a person working for a single company — or an insurance broker — a person representing them as the buyer to more than one insurance company. Drivers can access both of these professionals if they use a rate comparison website, which allows them to receive a quote first, and then provide the finishing details after being connected with a broker or insurance agent.
What documents do you need to buy car insurance in Canada?
While insurance can differ by province, the documentation you will need is generally the same: driver’s licence and personal details, vehicle description, and driving history.
Whether buying new car insurance coverage or renewing your existing policy, you should ensure your driver’s licence is valid and shows your current address. Other personal details that you must provide are your birth date and phone number. You may also require the licence details of others living in your immediate household, like your partner, adult children, parents, or roommates.
You will need your vehicle identification number (VIN) and your vehicle’s make, model, and year. Take note of the kilometres on the odometer, too. What may seem like small details can make a big difference to your insurance premium.
The insurance company will also want to know if you’ve had any traffic violations in the last three years (excluding parking tickets) and whether you’ve made any previous claims. While an at-fault collision can impact your premium for up to six years, car insurance companies may request this information dating back as far as 25 years. Getting a copy of your driving record can help you clarify dates.
If you are switching insurance providers, you should provide the insurance agent or broker with your current company’s information and policy number.
How is your auto insurance premium calculated?
Insurance providers assess several risk factors to determine the premium you’ll pay, including:
- Age: Younger drivers often see higher rates as they have less experience on the road. Good drivers will usually get a lower premium once they turn 25 years old.
- Gender: Statistically, young men are riskier to insure than women, increasing the premium they pay until about age 25.
- Where you live: Urban areas with high population densities typically have higher claims activity and, therefore, higher insurance rates.
- The kilometres you drive: Those who drive less will often see lower rates, and those who drive more will see increased rates. So, it is important to keep your insurance company abreast of any changes to your commute.
- Vehicle make and model: The technology and safety features in today’s vehicles advance quickly and vary drastically from one model year to the next.
- Driving record: A clean driving record can ensure you pay a low auto insurance premium; however, a major traffic conviction can land you a high-risk driver designation.
- Insurance history: Drivers will pay a surcharge for up to six years for an at-fault collision. Insurance providers will want to know about other claims, like a cracked windshield, vandalism, or theft, too.
- Secondary driver: If you add an occasional driver to your policy, their driving record — good or bad — can impact your premium.
When you move or get a new job with a shorter commute, you should shop around to get the best car insurance rate. Try our car insurance calculator to see how much you’ll pay each month.
How much car insurance do I need?
A certain amount of car insurance is mandatory in every province and territory, although the amount varies. Most provinces require a minimum of $200,000 third-party liability coverage; however, in Nova Scotia, drivers must have $500,000. Drivers can usually increase their coverage but must maintain the minimum requirements to be on the road.
Drivers also have the choice to add optional insurance coverage, including:
- Collision: This type of coverage helps cover the cost of damage to your vehicle if involved in a collision with another car or object.
- Comprehensive: Damage from falling or flying objects, fire, vandalism, and theft may be covered by this type of coverage.
- All perils: A combination of collision and comprehensive coverage protects the policyholder from almost all risks.
- Specified perils: Drivers can add certain risks to their policy, like hail or earthquake damage.
Drivers can include additional endorsements in their policy, like accident forgiveness, coverage for transportation replacement, or a waiver of depreciation. While these coverages can save you hundreds, if not thousands of dollars if you need to file a claim, you will pay more for your annual premium if you have them.
How long does it take to get car insurance?
Purchasing car insurance is far simpler today than it’s ever been — it can be done from the comfort of your own home, whether from behind a screen or over the phone at your convenience.
At LowestRates.ca, for instance, you can get a car insurance quote online in three minutes. Comparing your options and choosing the right coverage can usually be done in the same day.
Can you buy car insurance without a car?
Drivers can purchase standalone non-owner car insurance policies through their public insurance system. A driver may want to do this if they don’t own a car but often rent or borrow a vehicle. However, in provinces like Ontario, with a private insurance system, this is not possible. Drivers must add an endorsement (OPCF27 in Ontario) to their existing policy to cover non-owned vehicles like rental cars.
Suppose you are a new driver with a G1 licence. You can’t insure a vehicle in your name until you graduate up the licensing system, so you will have to go without your own car. In this case, your parent, guardian or spouse can add you to their policy. Generally, there is no charge for doing this. Once you get your G2 licence, you must notify your insurance provider.
Can I purchase car insurance online?
Most insurance companies allow drivers to buy car insurance online in Canada, whether from an agent or broker. You can save time and money if you buy car insurance online using a rate comparison website, which allows you to compare multiple quotes quickly and conveniently.
Whether your province has a public or private insurance system, you can purchase auto insurance online. You will need to provide all the details you normally would, like your name, address, and birth date. You might also be able to update your personal details via an online portal your insurance company gives you access to. And, if you get car insurance online, your insurance company will usually send your renewal reminders via email. But don’t forget to shop around at renewal time. You may find a better rate from another auto insurance provider online in Canada.
When is the best time to buy car insurance?
Did you know the best time to shop for auto insurance is before you buy your car? Understanding how much a certain make or model of vehicle can impact your premium will make your car buying decision a little easier.
While experts say the best time to buy a car is from September to December, when manufacturers are clearing out vehicles ahead of the new year, there is no perfect date to purchase car insurance.
However, if you plan to switch companies, there is. Cancelling your policy before you’re up for renewal may result in cancellation fees. You can still compare auto insurance companies.
But unless another provider saves you enough money to outweigh the cost, you should wait until your term ends to start shopping around.
How to get cheap car insurance
Some discounts include:
- Winter tire discount
- Good student discount
- Alumnus discount
- Senior discount
- Driving school certificate discount
The list can go on because there are many ways to save. Ask your insurance agent or broker if you are eligible.
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About the author
Hayley Vesh is an editor/writer in the personal finance space. Her work has also appeared in Global News. She is passionate about financial literacy and the pursuit of knowledge through lifelong learning.