Car Insurance Savings: Canada vs USA

by CommonGroundNews
Car insurance

From rates to injury claims, there are a few key ways in which auto insurance differs between Canada and the United States. Consumers moving from one country to another may be curious about how exactly their insurance rates will adjust. 

There are a few ways to look at car insurance in Canada vs the USA. On the similarities side, both of them require proof of car insurance coverage and a minimum liability amount. Both countries also have the same process for searching for insurance. The differences include who pays insurance claims, no-fault policies, minimum policy requirements, and more.

Here are some of the main ways auto insurance is different across the Canada-U.S. border.

Who pays for insurance claims in Canada vs the USA?

One of the biggest differences is in who pays for insurance claims in Canada vs the USA. In the USA, your insurance provider will cover your injury claim. In some provinces of Canada, however, the government actually pays for the claim. 

There is a stipulation, however. The government only pays out the claim if it is an injury claim. The government won’t pay for vehicle or property damages. The Canadian private insurer will pay for the damage claims, just as they do in the USA.

Meanwhile, in the USA, the insurance company is solely in charge of paying out insurance claims, regardless of what kind of damages they involve.

How do insurance and car requirements differ?

There are a few ways requirements differ between these two countries. For one thing, in the USA, drivers must register their cars and get insurance for them separately, and it is illegal to have a car registered that isn’t insured.

In Canada, however, a car is considered insured as soon as it is registered. If the driver stops paying for insurance, the car is unregistered and it is illegal to drive it. This makes the process of getting insurance a bit easier than it is in the USA.

Another major difference is that in the USA, while minimum requirements differ by state, they still require only liability coverage. Only 12 states follow a no-fault insurance system.

On the other hand, Canada requires more than just liability coverage. Depending on where you live, you may need to get more coverage for medical and other costs. Mandatory coverage in Canada must also cover accident benefits, uninsured motorist benefits, and DC-PD (Direct Compensation-Property Damage).

All insurance is handled through private companies in the U.S., and there are no state programs that provide insurance. In Canada, there are both private and government insurance programs.

Businessman with car insurance

What happens to your insurance if you move to another country?

While the way claims are paid and the way registration and insurance are connected differ, fortunately, insurance doesn’t change too much across the border. For those moving from the U.S. to Canada or vice versa, you may not even need to get a new insurance provider. Many of the best car insurance companies sell insurance policies in both the USA and Canada.

Because of this, many drivers may be able to stay with their current provider. Most discounts such as anti-theft and safe driver discounts will be applied to both U.S.-based and Canadian drivers.

Because Canadian drivers are required to have more coverage than U.S. drivers, you may need to upgrade your policy if you move across the border into Canada. Talk to your provider about your options and what will need to change.

For visitors to one country or the other, there is more good news. U.S.-based insurance is valid in Canada for those traveling, and the same is true for those with Canadian car insurance in the U.S. liability and physical damage coverage will extend over the border into America, though it doesn’t extend into Mexico.

Drivers going from the U.S. to Canada should also keep in mind that there are currently COVID-19 travel restrictions, including a mandatory 14-day quarantine and automated government calls to ensure compliance.

Those moving into the USA should know that they may be able to get by with less insurance legally, though it is still safer and more cost-effective in the event of an accident to have full coverage.

How to Save on Insurance in Canada vs the USA

Both Canadian and American drivers need to optimize car costs, including maintenance and mileage, and this includes finding cheap insurance. Fortunately, there are plenty of insurance comparison tools available online that have offerings of insurance available in both countries.

If you are moving, you might as well look and compare insurers and see if there are any new discounts you can add to your policy, even if your insurance provider will remain the same across the border.

In addition, you should consider if your driving habits will change after your move. Will you be switching to fully remote work, or will you need to start a longer commute? All of these changes will adjust how your insurance rates are calculated. You may need to switch to or from a pay-per-mile policy or see if you can qualify for a safe-driver discount.

Another way to save on insurance is to install safety features into your vehicles, such as anti-lock brakes or passive restraints. These and other features can often snag you great discounts in both Canada and the USA.

Car insurance often costs more in Canada than it does in the U.S., particularly in certain provinces such as Ontario. This is because Canadian car insurance requires more coverage and also has higher payout limits. So while the insurance is technically comparable in terms of value, it costs more because of the higher amounts of coverage required.

Regardless of what you choose, know that there are plenty of ways to boost your insurance and car savings whether you are moving from Canada to the USA or vice versa.

Deborah Goldberg writes and researches about car insurance and savings for the car insurance comparison site, CarInsuranceComparison.com. She is passionate about financial freedom and educating consumers about saving money in emergency situations.

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