A Brief History

Widespread use of the automobile began after the First World War. Cars were relatively fast and dangerous by that stage, yet there was still no compulsory form of car insurance anywhere in the world. Injured victims would seldom get any compensation in an accident, and drivers often faced considerable costs for damage to their car and property.

Compulsory car insurance was first introduced in the United Kingdom with the Road Traffic Act 1930. This ensured that all vehicle owners and drivers had to be insured for their liability for injury or death to third parties whilst their vehicle was being used on a public road.

On November 1st, 1996 the Automobile Insurance Rate Stability Act became law within Canada.  This act set out provincial minimum standard automobile insurance.  To deter persons from intentionally driving without insurance, the maximum fine for a first office is set at $25,000 and a maximum fine of $50,000 is set for secondary offences

Basic auto insurance is mandatory throughout Canada with each province’s government determining which benefits are included as minimum required auto insurance coverage and which benefits are options available for those seeking additional coverage.

Some provinces in Canada have implemented some form of no-fault insurance.  The primary purpose of no-fault automobile insurance plans is to provide benefits to persons insured regardless of who is at fault.  In Ontario, a threshold no-fault system is used. Under this plan, legal action against the responsible party is not permitted unless a certain “threshold” is exceeded (serious impairment, disfigurement, etc.).

* “Canada’s private automobile insurers pay out more than $7 billion dollars each year for injuries, death and damage to property.  Over 4000 people die in car automobile accidents and another 275,000 are injured in Canada every year.”

Mandatory Coverages in Ontario (OAP 1):

  1. Liability (PL/PD)
  2. Accident Benefits
  3. Uninsured Automobile Coverage
  4. Direct Compensation – Property Damage Coverage

Optional Coverages in Ontario (OAP1):

  1. Increased Liability Limits
  2. Physical Damage (Loss or Damage Coverage)
  3. Optional Accident Benefits Coverage
  4. Other Coverages or Endorsements

*Source: 2009 Facts; Insurance Bureau of Canada (IBAC)