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11 minute read Published on Jan 24, 2026 by BrokerLink Communications
Does car insurance include HST in Canada? It’s a common question, especially when most purchases in provinces with HST are hit with as much as a 15% Harmonized Sales Tax (HST). The short answer: no. Your car insurance premium itself is tax-exempt, but you might still see small administrative or processing fees here and there that could include HST.
In Canada, insurance premiums, including car insurance, fall under the category of “financial services,” and under the Income Tax Act, most financial products aren’t subject to consumption taxes like HST or GST. If you live in an HST province like Ontario, your car insurance premium already excludes any HST, so what you see is what you pay. There are no hidden 13% charges tacked on at checkout. However, you might see provincial tax or other fees for non‑auto insurance policies. So while we've already answered your question, if you'd like to learn more about HST and whether other parts related to your premium, like administrative fees or late payment charges, may be subject to HST, keep reading.
Let’s start with the basics: HST stands for Harmonized Sales Tax. HST is a blended tax that combines the following federal and provincial taxes into one unified tax:
Federal Goods and Services Tax (GST, 5%)
Provincial Sales Tax (PST, % varies by province)
In provinces that use it, the HST rate ranges from 13% to 15%, depending on the province:
Province
HST
Ontario
13%
Nova Scotia
14%
New Brunswick
15%
Newfoundland and Labrador
Prince Edward Island
For most goods and services you buy, like your clothing, electronics, or even your morning latte, HST is automatically included. However, some areas, like financial services, are unique. Financial services, which include things like banking, investments, and, yes, insurance, are generally exempt from GST and HST under Canadian tax rules, according to the Canada Revenue Agency (CRA).
That means your core car insurance premium is tax-free, which is a small silver lining when you’re already paying some of the highest auto insurance rates in the country. For example, Ontario pays some of the highest auto insurance rates in the country. According to the Financial Services Regulatory Authority (FSRA) of Ontario, the average premium in Ontario as of October 2024 was $2,006, with the GTA seeing a much higher average of $2,638. If you’re elsewhere in Canada, it works pretty much the same way. Quebec, for instance, uses GST and a separate QST (Quebec Sales Tax), while Alberta only uses GST. Either way, insurance premiums are still exempt.
If you've ever wondered why your car insurance bill doesn’t include that extra line for HST, it's because it all comes down to how insurance is classified in Canada. As you are now aware, under federal and provincial tax laws, insurance is classified as a financial service, and most financial services are exempt from GST/HST.
According to the CRA, “insurance policies and the arranging for, or the service of, insurance policies” fall under exempt supplies, meaning they aren’t subject to tax. This approach helps keep essential financial services, like insurance, more accessible to Canadians. In Ontario’s official guidance, the province confirms that "insurance premiums are exempt from Ontario's portion of the HST." The same rule applies throughout the Atlantic provinces, saving drivers quite a bit each year, since HST rates can reach up to 15% depending on which Atlantic province you live in.
The good news is that even optional coverages and endorsements (like roadside assistance or rental car coverage) are generally still part of the overall premium and remain tax-exempt. But (and there’s always a but) certain fees tied to your policy aren’t so lucky. Administrative fees can be subject to HST because they aren’t classified as part of the actual insurance coverage. These can include:
NSF (non-sufficient funds) charges
Policy delivery fees
Late payment fees
So, while your main premium is tax-free, those “extra” charges might come with a little tax surprise.
When it comes to making a car insurance claim, most people are surprised (and relieved) to learn that they don’t have to worry about HST on the claim payout itself. Claim payments from your insurance company are not considered taxable supplies because they’re essentially financial reimbursements to help you get back on the road.
According to the CRA, your car insurance deductible (that out-of-pocket portion you pay before your insurer covers the rest) is also not subject to HST. You simply pay the deductible amount as stated in your policy, and that’s it. So, if your deductible is $500, you only pay $500.
So, let’s say your car needs repairs. Here’s where things get a little more complicated. The repair shop’s invoice will include HST on parts and labour because auto repair services are taxable services. In provinces like Ontario, that means a 13% HST is added to the final bill.
The good news is that if your insurance company is paying the shop directly, they typically handle the HST as part of the covered repair costs. However, if you’re paying for the repairs first and claiming reimbursement later, you’ll need to pay the full bill (HST included) and then submit your receipts to get reimbursed afterward.
For example, say your total repair bill is $5,000, including $650 in HST, and your deductible is $500. You’d pay the $500 deductible to the repair shop, and your insurance company covers the rest, including the tax, when it pays the shop directly. So, while your insurance payout itself is tax-free, the services or products you use that payout for can still be taxed, just like any other purchase.
Car insurance premiums aren’t the only ones that escape sales tax in Canada. The same tax-exempt treatment generally applies to commercial auto insurance, fleet insurance, and even non-resident vehicle coverage. This is because, again, they all fall under the umbrella of financial services, and financial services are typically exempt from GST and HST.
According to the government of Ontario, you’ll see an 8% Retail Sales Tax (RST) applied to certain insurance premiums and related contributions. This tax (also known as the Provincial Sales Tax (PST)) shows up on premiums for taxable insurance contracts, group insurance plans, and some benefit plans, whether they’re funded or unfunded. Even contributions to insurance schemes or compensation funds set up by law, plus payments made into qualifying trusts, can be hit with this tax. And if you’re part of a reciprocal insurance exchange, your contributions there are also subject to RST. One example of where this 8% RST applies includes:
Insurance policies that cover property located in Ontario
This includes home insurance (also known as property insurance). In Ontario, while it's exempt from the GST portion of the HST, it's still subject to an 8% provincial or retail sales tax (RST). Home insurance is classified as a financial service, which is why the GST rules still apply (no GST). However, under Ontario’s Retail Sales Tax Act, the provincial tax does apply to some insurance premiums, and home insurance is one of them. This means that RST is deducted from the premiums paid under this taxable insurance contract.
Ontario is the only province that still charges RST on home insurance amongst the HST provinces. According to the Canadian Federation of Independent Business, there is no RST on home insurance in New Brunswick, Nova Scotia, or Prince Edward Island. Even Newfoundland and Labrador stopped charging RST in 2023. For more examples of taxable insurance contracts in Ontario, contact the Ministry of Finance.
There's a lot of information floating around on the web about car insurance and HST, so we've put together this list of common misconceptions to help you figure out what's real and what's not:
Nope! Whether you pay monthly or annually, your core car insurance premium is still tax-exempt. The payment frequency doesn’t change the tax treatment. You’re simply spreading the cost out, not adding tax to it.
Sometimes, yes, but not on your premium itself. In Canada, insurance brokers usually earn their income through commissions from the insurance companies, rather than charging clients directly for standard policies. However, brokers may add fees for services like mid-term policy changes, drawing up new contracts, or cancelling a policy mid-term, and those service fees may include HST. It’s always a good idea to ask your broker to break down any extra charges so you know exactly what you’re paying for.
No tax refund needed! Since your car insurance premium didn’t include HST in the first place, any refund you get is simply the unused portion of your premium. Just keep in mind that some cancellation fees may carry HST.
No. Any adjustment to your premium for changes to your policy is still tax-exempt. You might see extra fees for processing, though, and those may include HST.
Nope! Your deductible amount is a set contribution toward the repair cost. It’s not a service or product sale, so it’s not taxed. However, the repair shop’s bill will include HST on parts and labour, which your insurance provider typically covers.
The endorsements themselves are part of your premium, so they’re tax-exempt. But if you buy extra services directly from a rental car company (like GPS or extra insurance waivers), those may include HST.
Sometimes the process of buying car insurance can be a bit overwhelming, what with all the different types of coverage they can pick from or knowing whether sales tax applies. That's why the experts at BrokerLink have put together a list of tips to help make buying car insurance easier than ever before:
Never lie or omit the truth on a car insurance application. For example, someone might be inclined to give a fake address or lie about other family members using their vehicle in an effort to qualify for a cheaper rate. However, if the insurance company finds out that you provided false or misleading information on your application, they could cancel your policy. A cancelled or non-renewed policy can have serious consequences, making it more difficult and expensive for you to obtain car insurance in the future.
A car insurance policy is are legally binding contract, so before you sign, make sure you have read it through thoroughly and are satisfied with the terms. Your policy will outline the coverage you are entitled to as well as the penalties you can face in various circumstances. Make sure you understand each one. If you have any questions about your policy, contact a licensed insurance broker.
Insurance companies in Canada are not all the same. They have different policy options, coverage terms, and methodologies for calculating premiums. Therefore, a quote from one insurance company isn’t necessarily going to be the same as another.
For this reason, before purchasing auto insurance, make sure to shop around and obtain quotes from multiple insurance providers. BrokerLink can help with this process by reaching out to several of Canada’s top insurance companies on your behalf and comparing quotes to find you the best rate.
Insurance policies can be complicated, so don’t hesitate to ask questions. If you do not understand part of your policy or believe your provider has made a mistake, set up a meeting for clarity. For example, if your rates went up upon policy renewal, ask questions to find out why.
If your circumstances change, such as recently passing the G2 road test, moving to a new neighbourhood, or buying a new car, make sure to notify your insurance company. Since car insurance is dependent on many factors, any changes in circumstance could affect your rates.
Keep in mind that your existing coverage is based on the information you supplied when you first submitted your application. This means that your insurance provider may choose to deny a claim or even cancel your policy if something changes and you fail to inform them.
Being knowledgeable about car insurance can help you when buying it. For example, before obtaining a quote, research how a car insurance deductible works, the difference between actual cash value and replacement cost, and what factors can impact premiums.
The cost of car insurance varies significantly throughout Canada. Insurance companies consider all kinds of factors when calculating auto insurance rates, from a driver’s age to their location, to the type of car they drive and even where they park it.
Therefore, the best way to find out how much car insurance will cost you is to contact an experienced brokerage like BrokerLink and request a free quote. And remember that since auto insurance is not subject to HST or GST, the price an insurance company quotes you will be the price you pay. There are no additional fees to budget for.
Never pay more than you have to for auto insurance by taking advantage of the following money-saving tips. From bundling insurance policies to enrolling in driving school, check out these BrokerLink-approved tips for getting cheap car insurance:
Bundle multiple insurance policies (e.g., home insurance + car insurance) with the same insurance company for a big discount
Purchase car insurance for multiple vehicles together for a multi-vehicle discount
Increase your deductible
Enrol in driving school (for young or new drivers)
Sign up for a telematics program (save up to 10% just for signing up!)
Ask about usage-based insurance if you don't drive often
Pay your auto insurance premium annually rather than monthly
Install winter tires on your vehicle
Buy an eco-friendly vehicle, such as a hybrid or electric vehicle
Maintain a clean driving record (e.g., no tickets, accidents, claims, etc.)
Do you still have questions about HST and car insurance in Canada? Contact BrokerLink. One of our knowledgeable and friendly insurance advisors will be happy to answer your questions, such as how much tax is on a used car in Ontario or whether car insurance can be deducted as a business expense. Plus, they can help you shop for a new car insurance policy to ensure you’re getting the best rate. If comprehensive coverage at an affordable price is what you’re after, working with a BrokerLink insurance broker is right for you.
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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