Basic auto insurance is mandatory throughout Canada, though each province is able to determine the minimum amounts requires. Accident benefits coverage is also mandatory throughout most the country, including Ontario. International drivers entering Canada are allowed to drive their vehicle for a 3-month period under the coverage of an International Insurance Bond.
When did insurance become mandatory?
Like in the U.S. auto insurance is mandatory for drivers in Canada. Auto insurance first became a requirement in individual states in the U.S. beginning around 1927 and the practice quickly spread from there. Today, drivers in Canada are required to carry insurance and there are minimum requirements as to what that insurance should cover.
Some of the required coverages include the following:
- Third party liability, which pays for injuries and damages for which you are legally responsible after an accident.
- Statutory accident benefits, which pays for your injuries after an accident regardless of who is at fault.
- Direct compensation-property damage, which pays for damage to your vehicle to the extent that another person is responsible for the loss.
- Uninsured motorist coverage, which protects you if you suffer a hit-and-run or get in an accident with an uninsured driver.
Why did insurance become mandatory?
There are many reasons that auto insurance became mandatory in Ontario. First, there’s the obvious reason. Auto insurance is meant to primarily protect strangers, who you don’t necessarily know. Because you don’t know them, the emotional aspect of the purchase is removed, making you less likely to buy the product.
Second, the damage done in a car accident is so great and so expensive that typical individuals would not be able to shoulder the cost alone. To prevent situations where one party harms another and cannot pay, mandatory auto insurance came into the picture. Without mandatory insurance, victims of accidents would be unlikely to ever see compensation.
Third, the government can use drivers licenses to impose mandatory insurance policies. While they can’t force you to buy life insurance, they can force you to spend money on auto insurance if you wish to retail the ability to drive.
The combination of factors drove Canadian lawmakers to make auto insurance mandatory across Canada. Each province sets their own minimum insurance laws, and Ontario has some of the strictest rules in the country. Most developed countries have insurance laws in place to keep citizens safe in the event of an accident. Check with your local insurance provider to see what is required where you live.