How Much Car Insurance You Need and What It'll Cost | Finder Canada

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How much car insurance do I need?

The easy way to compare coverage based on your budget, driving history, mileage and more

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Every province and territory has certain liability requirements for you to meet, but just opting for these minimum limits might not be enough for you to adequately protect your financial assets. Get the most out of your car insurance policy by knowing what to look for and how to decide what level and types of coverage you need.

How much car insurance do I need?

Third-party liability insurance coverage is required in every province and territory. It pays out money to other people if you’re the one who caused an accident. While you cannot drive without third-party liability insurance coverage, just meeting the minimum requirements may not be enough. Ask yourself a few questions to find out how much coverage you really need.

What factors should I consider?

The amount of coverage you need depends on the value of your vehicle, your annual mileage, potential risks to your vehicle and other factors.

Ask yourself the following questions to determine how much coverage is right for you.

What’s your budget?

The amount you’re willing to pay directly influences how much coverage you can get.

If you’re looking for cheap coverage

Start with your province or territory’s minimum coverage requirements. Consider adding coverage limits to cover at least the cost of your assets in case another driver decides to sue.

If you have room for more coverage

Collision, comprehensive and underinsured motorist are just some of the many coverage options you can add to your policy to ensure you and your car are completely protected.

How often do you drive?

The longer you’re on the road, the greater your chances of being in an accident.

If you drive often

Consider higher liability limits and collision coverage to cover damage to your car if you cause an accident.

If you don’t drive often

Ask about low-mileage discounts or pay-per-mile insurance.

Do you have a clean driving history?

Your driving habits can directly affect your insurance rates.

If you have a clean record

Ask about safe-driver discounts and consider a telematics device that tracks your driving habits in exchange for lower rates. Or see if you can use a smartphone app to do the same.

If you have a few tickets or claims on your record

Consider a defensive driving course or look for insurers that specialize in high-risk insurance to get better rates.

What vehicle do you drive?

New or foreign vehicles can be expensive to repair, and older, run-down vehicles might not be worth repairing.

If you drive a new or expensive vehicle

You’ll likely want collision coverage to cover car accidents, but consider also adding comprehensive insurance to cover almost everything else. Don’t forget to spring for higher limits to actually cover the cost of repairing or replacing your car, rather than just part of it. You may also want gap insurance to cover the full cost of your loan if your new car is totaled.

If you drive an older car

You’ll probably need third-party liability coverage to cover other drivers and meet provincial/territorial minimums, but collision coverage might not be worth the cost. Consider adding roadside assistance instead if your car is prone to breaking down.

Where do you park?

Your parking spot can impact your car’s risk of damage, theft, and wear and tear do to exposure to inclement weather – therefore, your rates are impacted too.

If you park on the street

Consider comprehensive coverage to cover most damage to your car that isn’t from a collision, such as theft, storm damage or a tree limb falling on your car. You also might want uninsured motorist property damage, which can cover you from hit-and-runs without having to pay your collision deductible.

If you park on your property or in a garage

You still might want comprehensive coverage just in case of a break-in or potential storm damage.

Will you need a rental if your car is in the shop?

Sometimes repairs can take a few days, so think about how you’ll get around in the meantime.

If you have another means of transportation

You might not need rental car coverage or roadside assistance if you can rely on a friend or family member, or have access to decent public transportation.

If you don’t have another way of getting around

Consider rental car coverage, which provides an allowance for a rental car while yours is in the shop.

Do you have a car loan?

You might want extra coverage if your vehicle is leased or financed.

If you have a car loan

Your lender may require you to have both collision and comprehensive coverage. Consider adding gap insurance, which pays off your loan if your vehicle is totaled before you finish paying it off. Gap insurance covers the gap between the amount of your car loan, or what the car was worth when you first bought it, and the amount you’d get from a total loss, which is less than the original loan value due to depreciation.

If you don’t have a car loan

Insure your vehicle for its full value so you don’t lose out if it’s totaled, and consider adding collision and comprehensive if it’s you’re a daily driver.

Do you have health insurance?

Medical bills can add up if you’re not covered in the event of an accident.

If you don’t have health insurance

Consider adding personal injury protection or medical payments coverage. While these aren’t a substitute for health insurance, they can provide some financial help in an accident.

If you already have health insurance

Medical payments coverage and personal injury protection can help extend your coverage or even help pay for your health insurance deductible, though they might not be a necessity.

Do you have any modifications or custom equipment?

Modifications can affect your insurance rates and coverage.

If your vehicle is modified

Consider modified car insurance, which helps protect features that aren’t covered by your standard policy.

If your vehicle is standard

Ask your insurer if it requires original equipment manufacturer (OEM) part replacements, which can provide original parts whenever your car needs repairs.

Compare free car insurance quotes online

Name Product Roadside assistance Third-Party Liability Collision Coverage Comprehensive Coverage Discounts Available Available Provinces
Sonnet Auto Insurance
Up to 25%
Alberta, New Brunswick, Nova Scotia, Ontario, PEI, Quebec
Get auto insurance with Sonnet in just five minutes. Save up to 25% on your auto insurance through discounts and bundling options.

Who it might be good for: Drivers looking to apply and manage their car insurance completely online.
Surex Auto Insurance
Up to 25%
Alberta, Northwest Territories, Nova Scotia, Ontario, Saskatchewan, Yukon
Submit one application and receive quotes from 10+ insurers. Save up to 25% on your car insurance, plus get access to an insurance advisor.

Who it might be good for: Drivers looking to use an insurance broker to compare multiple pricing and coverage options.
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Compare up to 4 providers

What are the provincial and territorial minimums?

Every province and territory has different minimum car insurance requirements. Between coverage limits and types of insurance, be aware of the minimum requirements where you live before getting on the road.

No-fault coverage

When you have no-fault coverage, each person in an accident is covered by their own insurance company, regardless of who caused it. Because of this, many of these types of policies also require personal injury protection, a separate type of coverage designed to pay for medical expenses. All provinces in Canada enforce some form of no-fault car insurance.

At-fault coverage

In an at-fault system, each insurance company pays for damages according to the degree of fault of each party. This type of coverage is optional in Saskatchewan.

How do I compare coverage?

When comparing coverage, consider the three main types of coverage: third-party liability, collision and comprehensive. Then decide if you can afford any additional coverage. Compare coverage types and costs to determine which fit your needs, based on where you live and how much you can spend.

Guide to car insurance coverage

Type of insuranceWhat is it?Who is it best for?
Third-party liability coverageThe most basic insurance. Pays for property damage and medical expenses of the other driver when you’re at fault.Every “at-fault” coverage includes it. Consider minimum requirement limits if you’re looking for the cheapest policy or if your car isn’t worth repairing.
Collision coverageCovers damage to your vehicle when you’re involved in an accident.If you don’t want to pay out of pocket to repair or replace your car. It’s especially good if your car is new or expensive or if you’re leasing or financing a car.
Comprehensive coverageProtects your vehicle from damage that happens off the road, such as theft, weather or vandalism.If you’re looking for extra protection or live in areas prone to adverse weather conditions or high crime rates.
Medical liabilityCovers injuries to another person in an at-fault accident, including medical care, legal help and funeral costs.Gets you off the hook for medical bills if someone else is injured in an accident, which could cost thousands.
Accident benefits/bodily insuranceCovers your healthcare after an accident including ambulances, nursing care and lost income.If you can’t afford to lose your income or pay for those extra healthcare costs not covered by your provincial health plan.
Uninsured and underinsured motorist coverage (UM/UIM)Protects you if the other driver doesn’t have any or enough auto insurance to cover damage to you or your vehicle.Those who live in an area with a large number of high-risk or uninsured drivers.

How much car insurance is too much?

If your car has had a good run but hasn’t held its value, getting collision and comprehensive insurance may end up just costing you more than they’re worth. To find out if the extra protection for your vehicle would be overboard, consider the following factors:

  • What your vehicle is worth
  • What your deductible is
  • How much collision and comprehensive cost

If your deductible is more than your car is worth, it’s already time to drop collision and comprehensive. But if your car is still worth more than your deductible, consider how many premium payments it would take to reach your car’s value.

It may be worth simply setting aside what you would pay in car insurance premiums to pay for the repairs on your own, rather than dumping more money into collision and comprehensive coverages. Just make sure you’re actually saving the amount you need.

Should I balance cheap insurance with good coverage?

The cheapest car insurance you can find won’t necessarily be the best car insurance. When selecting car insurance, you’ll want to weigh cost versus value to find the right insurance for your needs.

  • Accident forgiveness could save you long term. This feature might cost more on the front end, but when your rates go up because of a fender-bender, you could end up paying more in the long run.
  • Customer service is usually worth paying for. Getting great support may be worth the extra couple dollars each month. You might wish you’d factored in customer support when it comes time to file a claim or get help with an issue.
  • Less coverage means less protection. The minimum requirements are a good place to start. But in a major accident, you might be glad you increased your coverage. After your coverage maxes out, you’ll be left footing the bill.
  • Free towing is often handy. Included roadside assistance can end up paying for itself when you consider the fees, stress and time involved in getting help when you’re stranded on the side of the road.

When it makes sense to buy the cheapest car insurance

Getting only the minimum coverage requirements could give you really cheap car insurance rates, but it could cost you much more money in the long run if you’re involved in an accident. If the cost to fix the damage to your car exceeds your max coverage amount, you’ll be left to make up the difference.

However, as your financial situation changes, be sure to review your coverage because there are certain situations where you might want to consider getting minimum coverage.

  • You don’t plan on putting many miles on your car. Does your car sit in the garage most of the time? The less you drive the less risk there is that you might get in an accident. This is a time when minimum coverage might be a good choice.
  • Your car isn’t worth much. Are you driving around an old car that would cost more to fix than to replace? Collision and comprehensive coverage probably aren’t worth paying for. Go ahead and find a budget insurer or a liability-only policy for your beater car, though consider increasing liability limits if you could afford it.
  • You have little to no income. If you’re living paycheck to paycheck and need your car to simply get to work, the monthly savings that minimum coverage provides might be worth it.
  • You have a low net worth and no major assets. You are less likely to be sued if you are at fault in an accident if you don’t have any valuable assets like a home or expensive collectibles. However, you can still have a lien placed against you, or you could lose your license for an inability to pay.
  • You’re working to remove points from your license. If a poor driving history has racked up points on your license, you’re likely paying a higher insurance premium. Obtaining minimum coverage in this situation can help to offset the costs.

How much coverage do I really need?

Price is important, but it’s not everything. The best move is to find the coverage you want first, and then try to reduce your premiums from there.

Start with the bare minimum requirements for your province or territory and add more coverage types from there. Then see how much extra it costs to increase maximum coverage. You can often double components of your coverage for only a few bucks more a month.

  • Provincial/territorial minimum. Start with the basic coverage required by the province or where you live.
  • Liability only. Cheap, liability-only auto insurance is a good starting place for low cost premiums on older cars. Add on extra coverage maximums for a slight premium increase.
  • Full coverage. Think about adding coverage for damage to your car in an at-fault crash with both collision and comprehensive coverage. You can typically add coverage like towing and glass coverage once you have collision and comprehensive coverage too.

What happens if I don’t have enough coverage?

If you get in a car wreck and don’t have enough insurance coverage to pay for the damage, you’ll be responsible for paying for any damages that you cause and your insurance doesn’t cover. If you have assets that could be used to pay for these damages, such as a savings account or a home, you might be required to dip into your savings or home equity.

How do I pick a car insurance company?

While many car insurance companies seem to offer similar coverage, your experience with each insurer will be different. Consider the features that stand out to you and how you can get the most from your premium.

  • Features. Does the insurer or policy offer the features you’re looking for, like roadside assistance or rental car coverage?
  • Customer service. If customer service is a priority, find out if the company has a good reputation according to friends, family and online reviews.
  • Online support. Some insurers allow customers to purchase coverage, manage policies, file claims, pay bills and more online.
  • Price. Each company has its own underwriting process, so you’ll be charged the different amounts depending on who you are signed on with. Get multiple quotes to find the cheapest one for your situation.
  • Other types of insurance. Many car insurance companies cover home, health or life insurance and offer discounts for bundling your policies.
  • Claims service. Do you prefer to file claims in person, online or by phone? How long do claims typically take to file and pay out?
  • Payment options. Consider whether you’d prefer to pay by credit or debit card, check or cash, and if you want to pay monthly, twice a year or annually.
  • Local agents. If you prefer having a local agent to speak with, avoid the online-only insurers. Many companies offer service through agents and online — the best of both worlds.
  • Financial stability. Consider each company’s financial ratings with AM Best. While insurance companies are regulated by each province and territory, strong financial ratings decrease the possibility of an insurer failing to pay out claims.

Bottom line

Auto insurance can help protect you from the unexpected and get back on your feet after an accident. Ultimately, the type of coverage that’s best for you depends on where you live, what type of car you drive, whether you’re financing your vehicle and other factors.

Regardless of which type of policy you decide on, compare car insurance companies to get the best price.

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