Which province has cheapest car insurance premiums?

Where you live in Canada can make a big difference in how much you pay for car insurance. Some provinces, like Alberta and Ontario, tend to have higher rates —more than double what drivers in Quebec might pay. So, what’s the average cost of car insurance across the country, and what makes it vary so much? Let’s break it down.

Understanding car insurance in Canada

Car insurance in Canada is a must-have—you can’t legally drive without it. The main goal is to protect you from financial losses if an accident happens. For example, if you’re at fault in an accident and someone else’s car or property gets damaged, your insurance has you covered.

Beyond the basic coverage required by law, you can also add optional coverage for extra peace of mind. These add-ons can help cover damage to your own car, even if you’re at fault.

Once you and your insurer agree on a policy, you’ll pay a premium to keep it active. That way, your coverage is ready to step in if anything happens to you or your vehicle.

How does car insurance work in Canada?

Car insurance in Canada is anything but one-size-fits-all. While it’s mandatory across the country, it’s regulated at the provincial level, not federally, so the rules and costs can vary widely depending on where you live. To make things even more interesting, Canada uses both public and private insurance systems—and one province, Quebec, mixes the two in a hybrid model.

In British Columbia, Saskatchewan, and Manitoba, car insurance is handled by the government. Quebec takes a unique approach with a hybrid system—public insurance covers injuries, while private insurers handle everything else, like liability, collision, or comprehensive coverage. Everywhere else in Canada, car insurance is provided by privately run companies. Keep reading to find out more:

Public car insurance

Public car insurance is provided by a government-owned corporation. If you live in a province with public insurance, everyone who buys car insurance gets it through the same government-run provider. However, you might still have the option to add extra coverage through a private insurance company.

Private car insurance

Private car insurance, on the other hand, comes from privately owned, publicly traded, or mutual companies. Here, drivers have the freedom to shop around for car insurance, which can lead to more competitive rates in some regions.

No-fault insurance

In a no-fault insurance province, you file a claim with your own insurance company after an accident, no matter who caused it. This approach simplifies the claims process and cuts down on lawsuits, which can help keep rates lower in some areas.

Full tort insurance

Full tort insurance gives drivers the option to take legal action for compensation if they’re injured in an accident. While this provides more opportunities to recover damages, it can also mean higher auto insurance rates since insurers factor in the potential costs of lawsuits.

Car insurance costs by province

Average car insurance rates can vary a lot across Canada, and it all comes down to provincial differences. Each province has its own rules, coverage requirements, and systems for how insurance is managed. Add in factors like accident rates, and it’s no surprise that the cost of car insurance can look very different depending on where you live.

Alberta has some of the highest insurance premiums in Canada, while Quebec has some of the lowest car insurance premiums. Let's take a look at each province's average annual insurance rates:

Factors affecting provincial car insurance rates

When it comes to understanding auto insurance rates across Canada, there are five key factors to keep in mind that influence what drivers pay in each province. Let’s break them down in a way that’s easy to follow:

The insurance system

One of the biggest factors is whether the insurance system in a province is public or private. Public systems are government-run, while private systems involve competition among insurers. Each system comes with its own set of regulations, which can have a big impact on rates. For example, provinces with public insurance systems may have more standardized pricing, while private systems might see wider variations depending on market competition and individual driving profiles.

Mandatory coverage requirements

Every province has its own rules about how much insurance coverage is required to drive legally. Some provinces mandate higher minimum coverage limits, which can raise average premiums. For instance, higher liability coverage requirements mean more protection but also lead to higher costs for drivers.

Population

Population size plays a surprising role in car insurance rates. The more people and vehicles on the road, the higher the chances of accidents, theft, and insurance fraud. Urban areas, in particular, often see higher premiums because dense populations lead to more claims. Provinces with larger cities tend to have steeper rates compared to less populated areas.

Claims and loss ratios

Insurance companies rely on the premiums they collect to cover claims and stay financially healthy. If the amount paid out in claims (the loss ratio) is high compared to the premiums collected, insurers may increase rates to offset their losses. Loss ratios vary by province, depending on factors like accident rates and the frequency of claims.

Insurance laws

The ability to sue for damages (full tort insurance) also influences premiums. In provinces where lawsuits for injuries or damages are more common, insurers face higher costs, which they pass on to consumers through higher premiums. This is why some provinces have stricter rules about legal actions related to car accidents.

Mandatory car insurance coverage in Canada

As we’ve mentioned, having auto insurance isn’t optional—it’s the law in Canada. Driving without it can lead to serious consequences. Depending on your province and whether it’s your first offence or not, you could face fines as high as $50,000, have your vehicle impounded, lose your driver’s licence, or even end up in jail. Here’s a rundown of the mandatory coverages in Canada. The ones you’ll need depend on where in Canada you live:

Third-party liability coverage

Third-party liability insurance is mandatory across Canada and protects you if someone makes a claim against you after an accident. For instance, if you’re responsible for a collision that causes injuries or property damage, the other party could take legal action against you. This coverage would help cover the costs, including legal fees.

Each province has a minimum required amount of this coverage—$500,000 in Nova Scotia, $50,000 in Quebec, and everywhere else sets the minimum at $200,000. However, many drivers opt for higher liability coverage limits, like $1 or $2 million, to ensure extra protection in case the unexpected happens.

Accident benefits coverage

Accident benefits coverage is another mandatory part of auto insurance across Canada, but the amount of coverage varies by province. It helps pay for medical expenses if someone is injured in an accident, whether it’s you, your passengers, another driver, or even a pedestrian. The great thing about this coverage is that it applies regardless of who’s at fault.

It goes beyond what standard health insurance might cover, taking care of costs like physical therapy, prescription medications, rehabilitation, and more. It’s designed to support your recovery and ensure you get the care you need after an accident.

Direct compensation-property damage (DCPD) coverage

Direct compensation-property damage coverage is mandatory in some no-fault system provinces and helps pay for repairs to your vehicle after an accident. For example, if your car is damaged in a collision, your insurer will directly cover the repair costs, minus your deductible, instead of having to go through the other party's insurer.

Uninsured motorist coverage

Uninsured automobile coverage, required in most parts of Canada, protects drivers in situations where they’re involved in an accident with an uninsured or under-insured driver or are the victim of a hit-and-run.

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Popular optional auto insurance coverage in Canada

On top of the mandatory coverage, there are plenty of optional add-ons that Canadian drivers often choose. While the basics cover certain things, they don’t protect you from everything—like at-fault accidents or car theft. That’s where optional coverages, like collision, comprehensive, or even accident forgiveness, can make a big difference. Here are the optional coverages available for auto insurance in Canada:

Collision coverage

Collision coverage is a popular optional add-on for your auto insurance policy. It helps cover the cost of repairing your vehicle after an accident involving another car or a stationary object. You can make a claim with this coverage, regardless of whether you’re at fault for the accident.

Comprehensive coverage

Comprehensive coverage is another optional extra that many drivers choose for added security. Unlike collision coverage, it protects your car from non-accident-related incidents, such as theft or fire damage while it’s parked in your driveway, garage, or on the road.

This type of coverage shields your car from specific risks, often referred to as named perils, like fire, theft, vandalism, falling objects, or weather damage. For even broader protection, you can go with all-perils coverage, which combines comprehensive and collision coverage for ultimate peace of mind.

Accident forgiveness coverage

One final type of optional car insurance coverage popular among Canadian drivers is accident forgiveness. Accident forgiveness is additional coverage that can be added to your auto insurance policy as an endorsement, to protect your driving record and to help prevent your insurance premium from increasing if you have an at-fault accident claim. Note: coverage varies by province.

How to choose the right auto insurance coverage

Picking the right auto insurance coverage doesn’t have to be complicated—it’s all about finding what works best for your situation. Here are a few key things to keep in mind when making your decision:

Understand your needs

Start by thinking about your driving habits and lifestyle. Do you have a long daily commute, or do you drive only occasionally? Is your car brand-new or older? These factors can help determine how much coverage you’ll need. For instance, a newer car might benefit from comprehensive or collision coverage, while an older vehicle might not justify the extra cost.

Set a budget

Your financial situation plays a big role in choosing coverage. While it’s tempting to go for the most extensive protection, make sure you can comfortably afford the premiums. Look for a balance between adequate protection and staying within your budget.

Consider your driving history

If you have a clean driving record, you might qualify for discounts, which could free up room in your budget for optional coverage. However, if you’ve had accidents or tickets in the past, you might decide to focus on more basic coverage to keep costs manageable.

Think about your location

Where you live matters. Urban areas with higher traffic and theft rates usually mean higher premiums, so you might want to prioritize coverage that protects against theft or vandalism. In rural areas, your needs could be different, so tailor your policy accordingly.

How to qualify for car insurance in Canada

To get car insurance in Canada, you’ll need to meet a few basic requirements. Here’s what you need to know:

• You must be living in Canada.
• You need to be of legal driving age in your province, pass any required tests, and hold a valid licence.
• Your car should be for personal use only—business or commercial use requires a different type of policy.
• You must be honest in your application—misrepresenting details could lead to your policy being cancelled.
• You cannot have been convicted of insurance fraud within the past 10 years.

Where can you buy car insurance in Canada?

Canadian drivers have a few options when it comes to buying car insurance, depending on what works best for them:

Insurance brokers

Brokers can shop around for you, comparing car insurance quotes and coverage options from multiple companies all at once. They’ll help you find the best deal and make sure your coverage is in place. Think of them as your personal auto insurance shopper.

Insurance agents

Agents work for a single insurance company, so they can only offer you products from that specific provider. While this limits your options, they’re there to help you get coverage with their company.

Direct insurers

These are insurance companies that sell policies directly from their own brand. Agents who work for direct insurers only sell products from that company, simplifying the process but narrowing your choices. Each option has its pros and cons, so it’s all about finding what suits your needs best.

How to get an accurate car insurance quote

Finding the right car insurance is all about comparing your options. Start by gathering quotes from multiple providers to see what’s available and find the policy that best fits your needs and budget. To get an accurate quote, you’ll need to share details like your driving history, the type of vehicle you drive, and where you live.

While it’s possible to get a rough estimate without sharing personal information, insurers do need specific details to give you an accurate auto insurance quote. For example, they’ll consider things like your age, driving record, and how you use your car (like commuting or occasional driving). All of this helps them calculate your premium and ensure the coverage meets your unique needs.

Taking the time to shop around and provide the right details can save you money and help you feel confident that you’ve got the right protection in place. And if you don't want to do the insurance shopping yourself, consider working with a local insurance broker like BrokerLink where we can find you cheap car insurance quotes on your behalf.

What factors go into determining the cost of your car insurance quote?

Car insurance companies each have their own way of figuring out your rates. They use different formulas to assess your risk and calculate your premium. Some companies place more importance on certain factors than others. While some of these factors are within your control, others aren’t. Here’s a look at the key details insurers typically consider when giving you a car insurance quote:

Your age and gender

You are actually one of the biggest factors when it comes to your car insurance rates. Things like your age and gender both play a role. Unfortunately, these are things you can’t change. The good news? Premiums usually start to drop in your mid-twenties—once you've had a few years of experience behind the wheel. This means that drivers under 25 tend to pay the most, with young males paying even more since they’re statistically more likely to be in an accident. That’s why their rates are often higher than others.

Your location

Where you live has a big impact on your car insurance rates. If you’re in the city, you’ll probably pay more, while rural areas usually see lower premiums. Insurance companies use your postal code, neighbourhood, and region to figure out the risk level in your area. They consider things like accident rates, theft, fraud, and the number of claims in your community to determine how much you’ll pay.

Your vehicle

Your car’s make, model, year, and features play a big role in your insurance rates. If your vehicle is costly to repair or a popular target for theft, you can expect to pay higher premiums.

Your driving history

Your driving record is a big deal when it comes to your insurance rates. Insurers look at how long you’ve been licensed and insured, whether you’ve completed driver training, and if you’ve had any tickets. Keeping a clean record—staying claims-free and avoiding at-fault accidents—can go a long way in helping you score lower premiums.

Your driving habits

The more you drive, the more you’ll likely pay for car insurance. It makes sense—being on the road more often increases the chances of getting into an accident. If your driving habits change, like switching to a work-from-home job and driving less, let your insurance provider know. It could help lower your rates!

Your coverage needs

The type of coverage you choose, your policy limits, and any add-ons will all impact your premiums. For example, if you go for a comprehensive policy and add extra endorsements, like accident forgiveness, you’ll pay more than you would for a basic plan. It all comes down to how much protection you want.

Your insurance company

Your choice of insurance company can also play a big role in how much you pay. Sticking with the same provider without shopping around could mean you’re missing out on savings. When it’s time to renew your policy, it’s always a good idea to compare your options and see if you can get a better deal.

Find cheaper insurance with BrokerLink

Are you looking for affordable car insurance in Canada? BrokerLink is here to help. We're here to help you understand everything you need to know about car insurance in Canada, including which province has the cheapest car insurance premiums.

One of our friendly car insurance specialists will guide you through the quoting process, answer all your questions, and share helpful advice, like what you need to know when moving to a new province. If you’re looking to get a new policy to renew your current one, we’ve got you covered. We’ll shop around and compare insurance rates to find you the best coverage at a price you’ll love.

You can reach us by phone, email, or in person at any one of our locations throughout Canada. No matter how you choose to get in touch, a BrokerLink insurance advisor will be happy to assist you. We also encourage you to take advantage of our free online quote tool that can provide you with a competitive quote in minutes.

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