Can you buy a car without insurance?

Thinking about buying a car? You might be wondering if you need auto insurance before you can hit the road. It’s a common question, especially since car insurance is mandatory in Canada. Some people aren’t sure if they need a policy set up before driving off the lot or if they can sort it out later. Let’s clear that up for you today.

Is it possible to purchase a car without having car insurance?

Technically, yes, you can purchase a car without car insurance. However, it is illegal in Canada to drive a vehicle without it. So while you may be able to buy a vehicle without having car insurance, you won't be able to drive it home.

Now, say you purchased a car in a private sale and decide to tow it to your home. In this case, you wouldn't need auto insurance for it—though we would still strongly recommend it as it could get damaged on the way to your house or while it sits in your driveway or is parked on the road, and you would have to cover the costs yourself.

If you’re buying your new car from a car dealership, it’s a good idea to sort out your first car insurance policy before completing the purchase. Many car dealerships won’t let you leave with your new car until you show proof of insurance. And if you're leasing or financing your new car, your lenders will likely require you to have proof of insurance for you to get the loan.

However, if you’re replacing an old car and still have an active insurance policy, you might be able to use your previous car's insurance policy as proof for now for your new car as many insurance companies give you a short grace period to update your policy and transfer your coverage to your new car. Just be sure to update your policy as soon as possible. Your coverages may remain the same from your old policy, so it is important to ensure you have the right amount of coverage.

Fines for driving without insurance

The fines you'll face for driving without auto insurance vary depending on which province or territory you live in. Let's use Ontario as our example.

Driving without insurance in Ontario might not land you a criminal record or demerit points, but the penalties are no joke. Here’s what you could be facing:

• The minimum fine starts at $5,000.
• The Ontario car insurance regulator (FSRAO) tacks on a 25% surcharge to that fine. Other provinces may charge more.
• You could lose your licence for at least 30 days, and it could be up to a year.
• Your car might be impounded for up to three months.

Car insurance coverage options

When you're getting car insurance for your new vehicle, it’s important to know how the coverage works, especially if this is your first time buying car insurance. To make it easier, the BrokerLink team has broken down the most common types of car insurance in Canada—some are required, and others are optional:

Third-party liability coverage

Third-party liability coverage is a must-have in Canada—it’s the kind of car insurance that protects you if someone files a claim against you after an accident. For example, if you cause a crash that leads to injuries or property damage, the other person could sue you.

Most provinces require a minimum amount of this coverage. In Ontario, for instance, the minimum is $200,000. That said, many drivers choose to go for a higher limit to give themselves extra protection just in case something happens.

Accident benefits coverage

Accident benefits coverage is another must-have part of car insurance. It helps cover medical costs if someone gets hurt in an accident—whether it’s you, a passenger, another driver, or even a pedestrian. The best part? It doesn’t matter who’s at fault; your insurer will take care of it.

This coverage kicks in for things your regular health insurance might not cover, like physical therapy, prescription medications, rehabilitation, and more. It’s there to help you recover and get the care you need after an accident.

Direct compensation-property damage coverage

Direct compensation-property damage coverage is required in some provinces and helps cover the cost of repairing your property after an accident. For instance, if your car gets damaged in a collision, your insurer can reimburse you directly for the repair costs, minus your deductible. It’s a straightforward way to handle property damage without extra hassle!

Uninsured automobile coverage

Uninsured automobile coverage is another mandatory coverage in some parts of Canada, and it is designed to safeguard drivers who find themselves involved in an accident with an uninsured driver or who fall victim to a hit-and-run.

Collision coverage

Collision coverage is a type of optional car insurance coverage that you can choose to add to your policy. It can help you pay for damage to your vehicle following a car accident with another vehicle or a stationary object. This type of coverage can be claimed whether the policyholder is liable for the accident or not.

Comprehensive coverage

Comprehensive coverage is an optional add-on that many drivers include for extra peace of mind. Unlike collision coverage, it protects your car from non-collision events—like if someone steals your vehicle or fire damages it in your garage.

With comprehensive coverage, your car is protected against specific risks, known as named perils. These can include things like fire, theft, vandalism, falling objects, or even glass damage. If you’re looking for the most extensive protection, you can opt for all-perils coverage, which combines comprehensive and collision coverage for maximum peace of mind.

Gap insurance

Gap coverage, also known as guaranteed asset protection coverage, is important for any policyholders who finance or lease their vehicles. Without gap coverage, if your leased or financed vehicle were totalled before you had paid it off, you would have to cover the remaining balance after your insurance provider paid the actual cash value of the car. But with gap coverage, your insurance company would cover both the actual cash value of the car and the remaining balance.

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.

What factors impact car insurance rates in Canada?

By now you may be wondering, how much is car insurance per month in Ontario? You are not alone. Anyone who has ever purchased car insurance has had this question.

Ultimately, car insurance rates vary widely between drivers. Therefore, it is impossible to provide an estimate without knowing more information about you and your driving history. That said, the BrokerLink team can give you some insight into how car insurance rates are calculated in Canada. Below is a list of factors that you can expect your car insurance company to consider when determining your premium:

• Where you live (and where you regularly commute)
• Age
• Gender
• Model, make, trim, and year of vehicle
• Past claims
• Average mileage
• Driving experience
• Driving record
• Insurance history
• Deductible amount(s)
• How you use your vehicle

Tips to keep auto insurance rates low

When you purchase auto insurance, you don’t have to sacrifice quality to save money. To help you out, the BrokerLink team has put together some handy tips to keep your car insurance rates as low as possible while still getting great coverage:

Review your policy before it expires

Renewing your car insurance? Take a moment to review your policy before it expires—it’s a great way to spot updates you might want to make. Adjusting your policy could even save you some money. If you’re unsure how to update it for the best results, reach out to BrokerLink for expert advice. Our insurance advisors can offer personalized tips to help you lower your costs. And if your policy has already expired, don’t worry—they can assist with that too!

Pick a higher policy deductible

Picking a higher deductible for your car insurance plan is another great way to save money on car insurance. Insurers like it when customers select higher deductibles because it takes some financial responsibility off them. As a reward, you will usually be given a lower premium.

Bundle insurance products together

Bundling more than one insurance product is another cost-saving tip. Insurance companies will often give discounts to customers who purchase more than one policy from them at the same time.

Install snow tires on your vehicle

Installing snow tires on your car not only makes driving safer but it can reduce how much you pay for car insurance. This is a fantastic way of keeping costs down because it also keeps you safe, minimizing the odds of an accident.

Drive safely

Maintaining a clean driving record by driving safely is one of the best things you can do if you want to keep auto insurance costs low. The better your driving record, the lower your premium is likely to be. Even better, if you maintain a clean record for a certain number of years, you might even qualify for a safe driver discount, lowering your premium even further. If you want to learn some safe driving tips from the professionals, get in touch with BrokerLink today.

Contact BrokerLink to learn more

Buying a new car is exciting, but figuring out the insurance part can feel a bit overwhelming. That’s where BrokerLink comes in! We’re here to help you understand everything you need to know about car insurance in Canada, including whether you can buy a car without insurance.

One of our friendly car insurance specialists will guide you through the process, answer all your questions, and share helpful advice. If you’re looking to get a new policy or update your current one, we’ve got you covered. We’ll shop around and compare rates to find you the best coverage at a price you’ll love. Reach out to us today—call, email, or drop by—and let’s make your car insurance journey as smooth as possible!

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FAQs for buying a car without insurance coverage

What is drive away insurance?

Drive away insurance is named for a type of insurance that temporarily covers you when you “drive away” from the car dealership lot after purchasing a new car. It is simply another name for temporary car insurance, which is sold by many car dealerships and insurance companies and is designed to cover policyholders from the moment they drive off the lot with their new car until the end of the term. Drive away insurance policies usually have very short terms, often lasting between one day to one month.

Do I need car insurance before I buy a car?

Yes. Car dealerships require all customers to show proof of a valid car insurance policy before driving off the lot. However, sometimes showing proof of an existing car insurance policy is valid, even if you haven’t added your new car to it yet.

Can I drive without insurance if I just bought a new car?

It is illegal to drive without insurance under any circumstances. If you are buying a car and do not have an existing insurance policy, you will need to purchase temporary car insurance or purchase a full-term auto insurance plan that begins on the date you pick up your new car.

Do I need car insurance to test drive a car?

No, you do not need car insurance to test drive a vehicle. This is covered by the car dealership’s insurance policy since the car is still owned by the dealership at this stage. That said, you will need to have a valid driver’s licence if you want to test drive a vehicle.

If you have any questions, contact one of our local branches.