Car Insurance Coverage | Onlia

Car Insurance Coverage: Everything You Need to Know

A simple guide to the basics of car insurance in Ontario.

by Team Onlia
It’s a fair question because it’s a lot of money over the course of the year for the legal permission to drive in Ontario – and there are far too many stories about car insurance not being there when someone needed it.

In many cases, the problem was that they didn’t know what their car insurance covers. So, let’s break it down.

What is car insurance?

Car insurance is a guarantee of funds to pay for damages your car sustains in an collision or incident and – if necessary – to cover medical expenses for you, your family members or anyone else involved.

Besides the requirement in Ontario to hold car insurance, having a car insurance policy will keep you from having to pay these expenses out of pocket.

How does car insurance work?

  • When you decide to invest in car insurance, you’ll be presented with a policy. This is your agreement with the insurance provider.
  • The policy will outline the terms and what it covers, the premium (the cost per month to hold the policy) and the deductible (the sum you have to pay out of pocket for your insurance provider to cover the rest).
  • Should you get in an accident or be involved in an incident that causes significant damage to your car or someone else’s car, or injures you or someone else, you would submit a claim (notification that you need funds to pay for car repairs, a car rental, medical expenses or legal expenses).
  • Your insurance company will review your claim and verify that your policy covers the damages or injuries sustained as a result of the incident. If everything checks out, they’ll give you the money you need.

Types of car insurance and what they cover

This will depend on what’s included in your policy.

Every car insurance policy in Ontario will cover the basics – what you’re legally obligated to carry in order to drive a car in the province. The basics cover:

  • Third-Party Liability for financial resources if you’re sued as a result of the collision.
  • Statutory Accident Benefits for the funds to recover from injury more comfortably.
  • Direct Compensation for repairs to your car after an accident.
  • Uninsured Automobile for when some of the fault lies with an uninsured driver who can’t compensate you for damages or injuries incurred.

A basic policy covers you for any injuries not covered by OHIP, such as non-essential medical expenses, rehab and home care. It also covers lost income and education, as well as funeral expenses.


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From here, you can expand your policy to cover more, with products like:


  • Optional collision insurance coverage for the portion of an accident that you’re at fault for, over and above what your Direct Compensation will provide
  • Optional comprehensive insurance coverage for non-accident related damage like a theft or a downed tree.
  • Optional additional third-party liability car insurance coverage for more money to cover damages or injuries you caused another person.

Does car insurance cover rentals?

Almost all Ontario car insurance providers will offer optional additional coverage for damage to rented cars. It's called "Legal Liability for Damage to Non-Owned Automobiles,” a.k.a., the "Rental Vehicle Insurance Endorsement" or "OPCF 27.” But it only applies to vehicles being driven in Canada and the US.

Does car insurance cover other drivers?

If you gave verbal or written consent for someone who is licensed to drive in Ontario to drive your car, then your insurance policy will follow the car. However, the insurance provider reserves the right to deny coverage if they can prove that the car’s borrower has a spotty driving record – the thinking being that it’s the insured person’s responsibility to know who they’re lending their car to.

Also, keep in mind that your insurance record will follow the car as well. So if the person you loaned your car to gets in an accident, it’ll be your premiums that go up and could affect your renewal.

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