Car Insurance in Canada: Everything You Need to Know in 2025
Published on June 16, 2025 | By WealthFusions Finance Team
Whether you’re buying your first car or switching insurance providers, understanding how car insurance works in Canada is critical. Rates vary by province, age, car type, and even your postal code. In this data-backed guide, we explain how coverage works, what affects your premiums, how to choose the right policy, and ways to save hundreds per year. Let’s drive into the details.
1. Understand Mandatory vs. Optional Coverage
All provinces require basic auto insurance, but the specifics differ:
| Province | Public or Private | Mandatory Coverage | Minimum Liability |
|---|---|---|---|
| Ontario | Private | Liability, Accident Benefits | $200,000 |
| British Columbia | Public (ICBC) | Liability, Medical, Uninsured Driver | $200,000 |
| Alberta | Private | Third-Party Liability, AB | $200,000 |
| Quebec | Mixed (Public injury, Private damage) | Liability, Personal Injury | $50,000 |
Optional coverages: Collision, Comprehensive, Rental, Roadside Assistance.
2. What Affects Your Car Insurance Premium?
Car insurance rates are based on dozens of factors. Here’s what insurers look at:
- Age & Gender: Drivers under 25 often pay 2–3x more.
- Location: Urban postal codes (e.g. M1B in Toronto) can increase premiums by 25% or more.
- Driving Record: Tickets and claims stay on record for 6 years.
- Vehicle Type: SUVs often cost less to insure than sports cars.
- Annual Mileage: Driving 25,000 km/year may cost 15% more than <10,000 km.
Data: The average Ontario driver paid $1,655/year in 2024, the highest in Canada. Québec drivers paid the lowest at $717/year.
3. Compare Canada’s Top Car Insurance Providers
These insurers are well-rated by JD Power and FSRA for 2024:
| Provider | Province(s) | Avg. Premium (Ann.) | Customer Rating (5) |
|---|---|---|---|
| Aviva Canada | Nationwide | $1,450 | 4.2 |
| Intact Insurance | Nationwide | $1,525 | 4.0 |
| Desjardins | QC, ON, AB | $1,290 | 4.4 |
| Belairdirect | ON, QC | $1,340 | 4.3 |
| Sonnet | Online (Canada) | $1,375 | 4.5 |
Tip: Always get at least 3 quotes—rates can vary by over $800/year for the same profile.
4. How to Lower Your Premium in 2025
- Bundle insurance: Combine car + home to save 10%–25%.
- Increase your deductible: Moving from $500 to $1,000 can cut premiums by 15%.
- Install a telematics device: Safe drivers may earn discounts up to 30%.
- Ask for loyalty/multi-car discounts
- Take a defensive driving course: Especially useful for new drivers under 25.
5. Claims Process: What to Expect
When you’re involved in an accident or damage situation, follow these steps:
- Report the incident within 7 days (some insurers require < 48 hrs).
- Document with photos, notes, police reports.
- File a claim online or by phone.
- Adjuster assesses the damage and gives repair options.
- Payment is made directly to garage or you (if eligible).
Pro Tip: Minor collisions under $2,000 may be cheaper to pay out-of-pocket to avoid premium hikes.
Conclusion: Choose Smart and Save Big
Car insurance is not one-size-fits-all. By understanding your legal requirements, knowing what affects rates, and comparing trusted providers, you can save hundreds of dollars and secure the best coverage. Review your policy annually and take advantage of available discounts.
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Frequently Asked Questions
- 1. Is car insurance mandatory in Canada?
- Yes. All provinces require at least third-party liability coverage by law.
- 2. Can I drive without insurance if I borrow someone’s car?
- Only if the car owner’s policy allows it. Always confirm first—uninsured drivers face heavy penalties.
- 3. What is the average car insurance cost in Canada?
- In 2024, the national average was about $1,340/year. It varies widely by province and driver profile.
- 4. Can new immigrants get car insurance?
- Yes. Some insurers may consider foreign driving history; otherwise, you’ll start as a new driver.
- 5. Does car color affect insurance rates?
- No. It’s a myth. Vehicle make, model, year, and safety features matter more.
- 6. Should I buy collision insurance for older cars?
- If the car’s value is under $3,000, it might not be cost-effective to add collision coverage.
- 7. Can I cancel mid-term?
- Yes, but there may be cancellation fees. Always check your provider’s terms.
- 8. Will a speeding ticket affect my premium?
- Yes. One minor ticket may increase your premium by 10–15% for the next 3 years.