Understanding your auto insurance

If you own a vehicle in Ontario, you’re required by law to purchase insurance in case an accident occurs. At a minimum you must carry coverage for third-party liability, accident benefits, direct compensation property damage and uninsured automobile. You have the option to increase limits and purchase additional accident benefit coverage to protect your lifestyle.

Here are some key definitions to assist you in understanding the different types of coverage.

Third party liability protects you when someone is injured or killed, or property is damaged. This coverage pays defense costs to settle claims from lawsuits against you, up to the set limit. Legally in Ontario you must carry at least $200,000 in liability.

Accident benefits for protected parties refer to coverage for some of your expenses not covered by OHIP, regardless of who is at fault. These include:

  • Medical and rehabilitation: This benefit covers the cost of medical and rehabilitation expenses that are not covered by OHIP or a group insurance plan.
  • Attendant: If you have been seriously injured in a car accident and require an aide or attendant to look after you – either at home or in a healthcare facility – this benefit covers the associated expense.
  • Caregiver: If you are providing full-time care to dependants and can no longer do so as the result of a car accident, the caregiver benefit reimburses you for the expense of hiring someone to provide that care.
  • Housekeeping and home maintenance: If you are unable to perform your usual housekeeping or home maintenance duties, this benefit pays for someone to complete them.
  • Dependent care: If you are employed and have people relying on you for financial support, this benefit pays additional expenses incurred for their care. These may include, for example, your children or elderly persons in your care.
  • Income replacement: This benefit replaces a portion of your income if you cannot work as the result of a car accident.
  • Death and funeral: If you die as a result of a car accident, this benefit provides a lump sum payment to your spouse and dependants, with an additional payment to cover funeral expenses.
  • Indexation: This benefit provides for the automatic adjustment benefits to account for changes to inflation according to the Consumer Price Index of Canada.

Uninsured automobile coverage includes damage caused by an identified or uninsured driver, including hit-and-run accidents.

Direct compensation property damage coverage covers damage to your vehicle, its contents and equipment (such stereo, speakers, etc.) when someone else is at fault for an accident. This includes loss of use and contents.

Loss of use coverage will cover a rental vehicle while your car is being repaired.

Catastrophic injuries are defined by the Financial Services Commission of Ontario. For more information, visit their website