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How Does Car Insurance Work in Ontario?

Mandatory and optional coverages- When it comes to how auto insurance works in Ontario, the first thing to note is that Ontario legislation requires every driver must have car insurance on their private passenger vehicle. Mandatory auto insurance includes minimum coverages which are as follows: third-party liability (coverage in case you are sued for 3rd party property damage or bodily injury), statutory accident benefit (also know as your personal injuries), Direct Compensation Property Damage (also known as no-fault insurance), and uninsured automobile insurance (coverage you must have to cover you in case the 3rd party has inadequate or no insurance). These requirements are built into all standard auto insurance policies that all insurance companies offer in Ontario. Drivers can choose to purchase non-mandatory coverages such as physical damage coverage for their personal vehicle, vehicle replacement coverage, rental car coverage when on vacation, accident record protection, depreciation protection, etc. Please see the charts below that give a break-down between the differences between mandatory auto insurance coverage and optional coverages.

Government regulated Auto insurance but a private insurance model- As noted, the provincial government of Ontario regulates what Ontario drivers must have in terms of auto insurance. However, the province of Ontario operates under a private insurance model. In this model, private insurance companies such as Tradition Mutual Insurance Company compete with other insurance companies, brokerages and agencies to sell government regulated auto insurance products.

Ontario’s no fault insurance system- It should be noted that auto insurance in Ontario operates under a no-fault system. Many think that since it is named a “no fault system” that it means that on one is deemed at fault in the event of a claim. This isn’t the case. In fact, this system requires that drivers look to their own insurance company when it comes to claim regardless of who is deemed at fault in the accident. This no fault system was developed because insureds were getting frustrated with having to deal with a 3rd party’s insurance company. Instead, an insured deals with their own insurance company. Unless damages exceed certain thresholds, insurance companies assume the costs and do not subrogate against other auto insurance companies. This no fault system helps claims to be processed much smoother and in the end saves legal costs and frustrations. 

If you have any other questions concerning how auto insurance works in Ontario Canada, please take a few minutes to give some details about yourself. See the link below. After you do, Kyle Wijnands will be sure to reach out to you and discuss how he can get you cheap auto insurance with the very best customer service! He can also be reached directly at 519-393-3246.

John Brookshaw

"We have been with Tradition Mutual Insurance for 60 plus years Kyle is one of the BEST agents we have ever had Full marks on everything!"

Kim Good

I have my car insurance with Tradition Mutual Insurance and am very pleased with the rates as well as the service I have experienced. Kyle will be sure to provide you with excellent customer service answering any question you may have thoroughly and honestly. He has excellent communication skills and does well to ensure that your insurance needs are met and exceeded.

Dayna Vyse

Kyle found me a much better fit for my auto insurance for a cheaper price and was very easy and pleasant to work with! Kyle was very prompt and responsive and never pushy or sales-y. Super great to work with!"

More than the cheapest car insurance but the best customer service and claim experiences you will find in Ontario, Canada 


Find a cheap car insurance quote for these Ontario cities and towns: 

Frequently asked auto insurance questions: 

Ways to get cheaper auto insurance in Ontario: 

New Driver Discounts

If you have auto and home/tenant insurance, you can save on both policies

Bundle Policies

If you have auto and home/tenant insurance, you can save on both policies

Multiple Vehicles

If you have more than one vehicle in the household insured, car insurance rates are cheaper

Pay Annually 

Paying annually instead of monthly will make your auto insurance premiums cheaper. 

Take Driver Training

For new drivers, having driver's training helps to lower auto rates and get cheaper insurance. 

Pay on Time

If you pay on time, your insurance record won't have any cancellations for non-payment and will get you cheaper rates. 

Relationship Status

Typically, the statistics for those who are married are better and can get you cheaper auto rates. 

Have a Clean Record

At fault collisions, convictions, dangerous driving charges etc make premiums higher. A clean record means cheaper auto rates.  

Low KM Use

The lower the usage of the vehicle, the cheaper the insurance. 

Shop & Compare

Rates range from company to company. Look around to see what is the best and cheapest. 

Raise Deductibles

The deductible is what you pay before the insurance company does. Higher deductibles make car insruance rates cheaper. 

Winter Tires

Discounts are available for having winter tires on your vehicle during the snowy season. 

Mandatory Car Insurance Coverages Required in Ontario

Liability Coverage 

For bodily injury or property damage of someone else, costs are covered for you.

Direct Compensation

If you are are not at fault, damages to your car are covered.

Uninsured Auto

If an uninsured driver is negligent, medical costs and physical damages are covered.

Accident Benefits

Regardless of  fault, medical and other expenses you are eligible to receive are paid out.  have entitled to receive are covered.

Optional and Enhanced Auto Insurance Coverages


Protects your vehicle from damage caused by perils like fire, hail or theft (besides collision or upset.)

Collision or Upset

Protects your vehicle from losses such as collision with another vehicle or object. 

All Perils

Combines collision or upset and comprehensive coverage and also includes increased theft coverage. 

Accident Forgiveness

With this protection, provided that you are not charged with a careless, your rates won't increase if you have a partial or 100% at fault accident. 

Rental Car Coverage

Liability for damage to non-owned Automobile(s)  when insured persons rent other automobiles. Contact for further details.

Vehicle Replacement

Coverage for reasonable expenses incurred in
renting a similar substitute automobile or obtaining alternate transportation while
the insured vehicle is out of use as a result of an insured loss.

Depreciation Protection

If eligible, vehicle can qualify for 24 months of replacement cost coverage instead of the depreciated value at the time of loss. 

Family Protection



If the other motorist has
insufficient insurance, additional protection is available for you subject to liability limits and policy agreements. 

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