How Much Auto Insurance Do You Need? 3 Factors that Help Save Money

Driving in Canada means getting a license and an auto insurance policy. The question is, how much do you need if you’re living in, say, Ontario? There’s actually no straight answer.

The Requirements

In Canada, auto insurance is mandatory. Driving without one can result in hefty fines (as much as $50,000) and even the suspension of the license or the impoundment of the vehicle. The minimum coverage needed depends on the provinces.

Many of them, including Ontario, require at least $200,000. In Nova Scotia, it’s higher at $500,000, but in Quebec, one can already get coverage for $50,000.

This amount covers third-party liability insurance, which kicks in if the driver:

  • Incurs property damage because of a collision
  • Gets themselves and/or another party injured because of the accident
  • Kills someone as a result of the accident

However, many provinces also make other types of insurance coverage essential. These include uninsured automobile insurance, which provides benefits if the insured develops injuries after being hit by an uninsured motorist. It also extends the same amount to families left behind if the accident resulted in the insured’s death.

The statutory accident benefits coverage supplements possible healthcare costs associated with the accident. It can also cover up to 70 percent of the insured’s income or up to $400 a week, whichever is higher.

Ontario also mandates direct compensation property damage insurance. This one guarantees the insured can claim something if they incur property damage caused by another party, who is also insured.

What’s the Real Deal?

In reality, many Canadians prefer to buy auto insurance that covers between $1 and $5 million. The insurance industry also recommends the same. This helps prevent drivers from spending out of pocket in case of accidents that lead to something worse, like severe injuries or death.

A huge coverage, though, means a potentially high auto insurance cost. Most spend around $400 to even over $4,500 annually.

man driving a car

How to Spend Less on Auto Insurance

Ontario drivers should meet the minimum auto insurance coverage, but it doesn’t mean they cannot find ways to pay less over time.

One of the best ways to save money on auto insurance is to customize the coverage. Websites such as can help drivers achieve that. For instance, they may base the quote according to the type of vehicle or their use. Moreover, they may bundle it with other types of insurance, such as for the home, to make it more cost-effective.

Drivers can also use a lot of factors to negotiate their monthly repayments:

1. Driving Record

How far back auto insurance companies check driving records can vary. Usually, they check for any major accidents over the last six years and count citation tickets over the last six months.

A squeaky-clean record during this time can make excellent leverage to lower down premiums. One may also apply for a rider called accident forgiveness. Although it is an extra expense, it can stop any rate increase because of a single accident.

But what if a driver has records? Fortunately, there’s also the Ontario Insurance Act. One of its provisions states that the insurance company cannot increase the premium if the cost of damage because of collision is less than $2,000 and that it didn’t result in injuries as of July 2016.

2. Age

Unlike in getting a driver’s license, drivers below 18 years can be insured. As expected, however, the premium tends to be high. Not all may be willing to provide such coverage either. For this reason, parents often add these teenage drivers into their policies.

The good news is that the rates their parents pay could decline as the child gets older, especially when they turn 18. By 25, they may already obtain their own policy, and if their driving record is great, their premium can be affordable.

3. Gender

In 2018, an Alberta man made it to the news when he decided to change his gender—on paper—to pay less on his auto insurance policy.

Gender matters, although more discreetly than age and driving record, in calculating auto insurance. But this benefits women more than men, who end up paying more regardless of their age.

One of the common explanations is that women are more likely to be careful drivers than males. For example, they are more prone to driving under the influence, according to Statistic Canada.

The difference can be significant, so men may want to take advantage of the other two factors above to help bring down the overall insurance costs.

People in Ontario pay a lot of money on auto insurance for peace of mind. But they can also find ways to negotiate their rates if they play their cards right.

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