What Does Car Insurance Cover?
What does car insurance cover?
Car insurance covers injuries and property damage that you’re responsible for, medical expenses and other costs that you incur as the result of a vehicle collision, and (in some cases) damage to your vehicle caused by a wide range of perils.
The core of all car insurance policies in Canada is liability coverage, which ensures that all injured parties have a way to recover their losses through the at-fault driver’s auto insurance. Other mandatory coverage, such as accident benefits, direct compensation property damage (DCPD), and uninsured motorist coverage, are designed to make claims simpler and faster. They let drivers file claims with their own insurance company (especially when they’re not at fault) instead of dealing with long liability disputes.
Every province sets different mandatory requirements for car insurance. In British Columbia, Manitoba, Quebec, and Saskatchewan, public auto insurance provides the minimum amount of coverage for all drivers. In other provinces, private auto insurers provide standard coverage as well as further options.
In Ontario, a standard auto insurance policy includes:
- Third-party liability coverage: Covers bodily injury and property damage that you cause, along with associated legal fees (if applicable)
- Statutory accident benefits: Covers medical expenses, rehabilitation, and attendant care benefits for you and your household members regardless of fault*
- Direct compensation property damage (DCPD) coverage: Covers damage to your vehicle caused by a collision where you were not at fault; enables you to add additional physical damage coverage to your policy**
- Uninsured automobile insurance: Covers medical bills for you and your household if you’re injured in a crash caused by an uninsured or unidentified driver; covers physical damage to your vehicle caused by an at-fault driver with no liability insurance
* Other no-fault accident benefits, including loss of income and funeral benefits, are currently required by law but will be optional starting July 1, 2026.
** As of 2024, drivers in Ontario can opt out of DCPD coverage in writing.
The main thing that standard car insurance does not cover is damage to your own vehicle caused by at-fault accidents or by non-collision perils, such as severe weather and theft. Four types of physical damage coverage are available to give you financial protection if you need to repair or replace your vehicle:
- Collision coverage: Covers damage to your vehicle caused by a collision (regardless of fault)
- Specified perils coverage: Covers non-collision damage from a limited list of perils such as fire, theft, and hail
- Comprehensive coverage: Covers most non-collision damage, including vandalism, animal damage, and falling objects
- All-perils coverage: Combines collision and comprehensive coverage and covers theft by a household member or employee
Physical damage coverage is required by lenders. If your vehicle is financed or leased, the contract you signed with your lender likely includes a clause that requires you to maintain collision and comprehensive (or all perils) coverage on your vehicle. Check your loan documents to understand your legal responsibilities.
Finally, you can customize your coverage with certain endorsements that extend, modify, or supplement your existing coverage selections.
Your car insurance coverage questions, answered
Here are answers to some of the most common questions about what car insurance does—and doesn’t—cover.
What car insurance does not cover
Car insurance doesn’t cover normal wear and tear, intentional damage or fraud, or pain and suffering associated with collisions. You’ll need to pay out of pocket or file a personal injury lawsuit to deal with these losses.
You also can’t file a car insurance claim for:
- Rust
- Mechanical breakdown (except as covered by roadside assistance)
- Damage caused by war or terrorism
- Damage caused while operating a vehicle under the influence of alcohol or drugs
- Damage caused while operating a vehicle illegally (e.g., failing to stop at the scene of an accident or refusing to provide a breath sample)
- Damage caused while operating a vehicle as a taxicab or rideshare service (without appropriate endorsements)
If you’re not sure whether something is covered by car insurance, you can read your policy documents carefully or reach out to your insurance broker or provider directly for clarification.
Example scenarios: Is it covered?
How to choose the right car insurance coverage
Beyond the mandatory coverage included in a standard auto insurance policy, every driver has slightly different coverage needs. Factors that could impact your coverage needs could include:
- A new car
- One or more inexperienced drivers in your household
- A high rate of auto theft in your area
- A traffic-heavy commute
- Your personal appetite for risk
- Your budget
When you shop for car insurance quotes with PolicyMe, we’ll pair you with a licensed advisor who can talk through all of your coverage options and take a holistic look at your budget and needs. We’ll help you ensure that you’re getting the right coverage at the right price.
FAQ: What does car insurance cover?
This article is for general information only and is not insurance or legal advice. Examples and any sample quotes or rate ranges are illustrative and do not constitute an offer or guarantee of coverage, price, or eligibility. Actual coverage, discounts, and premiums depend on your individual circumstances and the insurer provider; if there is any discrepancy, your policy and insurer documentation govern. For advice about your situation, speak with one of our licensed insurance professionals.