Car insurance for newcomers to Canada

Welcome to Canada! Whether you’re here for work, school or a fresh start, we know that it’s big transition. If you want to drive a car in Canada, it’s important to understand how car insurance is set up here. This guide walks you through how insurance works, how to get it, ways you could save money and mistakes to avoid so you can drive with peace of mind.

The auto insurance system in Canada might work differently than it does back home. Liability insurance is required nationwide, and you have to buy it in the province you live in. Depending on where that is, you’ll be able to buy coverage from a private insurer or a government-run insurance program. The details vary from one province or territory to the next. You can also add optional coverages on top of the mandatory liability insurance to protect your own vehicle against damage.

Liability coverage is legally required in every Canadian province and territory to make sure everyone is protected. The penalties for driving without third-party liability insurance are severe. You could be fined or your licence could be suspended. The police could even take away your vehicle. The financial consequences can also be significant, especially if you’re involved in an accident. If you’re in an accident that causes bodily injury or property damage, you could be sued. Without coverage, you’d have to pay for legal defence costs and any damages awarded. Most people aren’t financially prepared for those kinds of expenses.

Canada’s auto insurance landscape is a patchwork of public systems, private systems and even a hybrid system. This affects how and where you buy coverage. Here is a breakdown of the different systems across the country.

Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador, Alberta, Prince Edward Island, the Northwest Territories, Nunavut and the Yukon have fully private auto insurance markets. You buy coverage from private insurers that offer different prices, options and services.

British Columbia, Saskatchewan and Manitoba have government-run public systems for mandatory coverage. You can still buy optional coverage from private insurers.

Quebec has a unique hybrid system. Injuries from car accidents are covered by a government program, no matter who’s at fault. Property damage insurance (like comprehensive coverage and collision coverage) is available from private insurance companies.

Here’s a simple breakdown of the main types of coverage in Canada.

Third-party liability insurance (mandatory): If you’re in an accident, it covers damages to the other person’s property, along with injuries that aren’t covered by a public insurance plan.

Collision insurance (optional): Pays for damage to your vehicle that happens in a rollover or an accident with another vehicle or object—regardless of whose fault it is. This type of insurance is often required to lease or finance a vehicle.

Comprehensive insurance (optional): Covers damage to your vehicle caused by things like theft, vandalism, fire, falling objects and certain weather events.

Here’s some information to help you get rolling in Canada.

If you’re new to Canada, you can usually drive with your foreign licence for a short period of time: up to six months in Quebec and from 30 to 90 days in the other Canadian provinces. Timelines and regulations vary, so check the rules in your province or territory, especially if you’re a temporary foreign worker or an international student.

You may be able to exchange your foreign driver’s licence for a Canadian one if your home country has a reciprocal licence-exchange agreement with the province or territory you’ll be living in. These agreements vary across Canada, so it’s important to check with your provincial or territorial transportation authority to see what you need.

If your home country doesn’t have this kind of agreement with your new province or territory, you’ll need to take a written test and a road test to get a Canadian driver’s licence.

You need valid car insurance to drive in Canada, even with a foreign licence. If you’ve leased or financed a car—or bought one outright—you’ll need to purchase a car insurance policy for your car before driving it. The policy has to include everyone who’s going to drive the car, including primary and occasional drivers. If you have a licence but don’t have your own car and are driving someone else’s, you should be added to their policy to make sure you’re properly protected.

To get started, you’ll need a few key documents that help insurers verify your identity, driving history and vehicle details. If your documents aren’t in English or French, you’ll probably need a certified translation. Here are some of the documents you might need:

• Valid driver’s licence (foreign, IDP or Canadian)
• Proof of residence in Canada
• Vehicle Identification Number (VIN)
• Driving record from your home country (if available)
• Insurance history from your home country

In some cases, proof of your driving experience from your home country may help lower your insurance premiums, which is the money that you pay for your insurance. Some Canadian insurers take international experience into consideration, so it can help to get a driver’s abstract or a letter of experience from your previous insurer. Be sure to have it translated, if it’s not in English or French.

Buying car insurance in Canada is pretty straightforward. You can get quotes from a few different insurance providers, but be sure to compare more than just the price. Look closely at deductibles, optional coverages, limits and benefits. In many places, you can buy your insurance online, although in some cases you’ll need to provide extra documents. Once your insurance is set up and you have proof of coverage and a valid license, you’ll be ready to drive.

There are plenty of ways to help lower your car insurance costs in Canada, even if you’re new to the country and still building your driving history.

1. Take a recognized driver’s course and drive safely

Completing an accredited Canadian driving course can help you get better rates, even if you’re an experienced driver. Many insurers see these classes as a sign of lower risk, since they teach safe driving habits, local road rules and defensive driving skills. It’s also a good way to get comfortable with local conditions, including winter driving. In many provinces and territories, using winter tires can also help you save. Depending on where you live, you might be able to get an insurance discount just for using them. But in some regions they’re mandatory, so no discounts apply.

Maintaining a clean driving record is one of the most effective ways to help lower your insurance costs over time. Every year of safe, claim-free driving helps strengthen your profile and could help reduce your premiums.

2. Choose the right vehicle

Your car affects your insurance premium in several ways. Repair costs influence one part of the premium, since cars that cost more to fix are generally more expensive to insure. Theft risk affects another part. Models that tend to get stolen more often or are especially attractive to thieves typically come with higher premiums. There may also be a surcharge if you don’t have a theft prevention system.

But prevention measures can help mitigate this cost. Tracking systems like TAG, Locate and Domino lower the risk of theft and may eliminate surcharges or help you qualify for a discount. Since each factor is priced separately, getting quotes before you buy can help you understand how the make and model you choose will affect your premium.

3. Bundle your insurance and ask about discounts

Buying your car insurance and your home insurance or tenant insurance from the same insurance provider is a great way to get a discount. This is known as bundling and with most insurance companies it may help you qualify for a better rate, depending on your profile and the insurer’s criteria. You can also ask about student discounts and group insurance rates for professionals and alumni.

For example, bundling your auto and home insurance with Desjardins Insurance gives you access to unique benefits like no-fee options and free access to legal assistance.

4. Sign up for a telematics program

Telematics programs, which use smartphone sensors to track your driving habits, may help you save. With programs like Ajusto^®, safe drivers can earn personalized discounts based on how they actually drive, not how long they’ve been insured in Canada.

Car insurance premiums in Canada are based on a number of risk factors, some of which you can’t control. Insurers look at things like your age, your vehicle and where you live. But they typically also consider your overall driving experience and your insurance history, which might be limited if you’re new to the country. For a more in-depth look at pricing, check out our article on how car insurance premiums are calculated.

Buying car insurance for the first time in Canada can be confusing, especially when everything from the rules to the terminology is brand new. To avoid making a little mistake that could end up costing you money or affecting your coverage later on, watch out for these missteps.

It might be tempting to say yes to the first quote, especially when you’re busy. But always compare at least two or three quotes to see if you can get the same coverage for a better price.

Sticking to your budget matters, but it’s important to have the right coverage. Depending on your circumstances, you may need accident benefits, collision, and comprehensive insurance.

There are serious risks to letting your policy lapse or starting to drive before you get coverage, including fines, liability and uncovered losses. Double check your start date and always, always, always keep your proof of insurance with you. One easy solution is to keep your digital proof of auto insurance on your phone!

Your past driving history may have an impact. If you have a letter of experience or proof of prior insurance that shows a clean driving record, share it with your insurer. It might help lower your premium.

Getting insured as a newcomer to Canada can feel overwhelming, but the process is much easier when you understand the basics. Just remember:

• Liability insurance is mandatory everywhere. No matter where you live in Canada, you need basic liability protection before you can drive.
• Every province and territory is different. Depending on where you settle, you may need to navigate a public, private or hybrid insurance system.
• Your foreign driving experience may be helpful. Bring a driver’s abstract or a letter of experience in English or French to potentially lower your premiums.
• Take out insurance in Canada if you’ve leased, financed or bought a car. And make sure you know how and when to get your Canadian driver’s licence.
• It pays to shop around. Compare quotes, look closely at the coverage and don’t hesitate to ask about discounts for bundling, student savings, winter tires and more.
• Your choices matter. Factors ranging from the car you buy to the deductible you choose can influence your premium.
• Avoid common pitfalls. For example, keep your insurance valid and understand what your policy covers.

Moving to a new country comes with plenty of adjustments, but car insurance doesn’t have to be hard. With the right documents, some comparison shopping, and a solid understanding of how the system works, you’ll be ready to hit the road with peace of mind. If you ever feel unsure, reach out to an insurer or a broker—they’ll be able to point you in the right direction.

Get a personalized quote and discover how your international experience can help lower your costs. Our advisors understand the needs of newcomers.

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Certain conditions, exclusions and limitations may apply. The terms and conditions of the coverages described are set out in the insurance policy, which always prevails.

These tips are provided for information and prevention purposes only. They are general in nature, and Desjardins Insurance cannot be held liable for them. We recommend using caution and consulting a certified insurance agent for comprehensive, tailored advice.

Ajusto is underwritten by Desjardins Insurance. Ajusto is only available in Alberta, Ontario and Quebec. Subject to the Terms and Conditions of the Ajusto Program in effect on the date of your enrollment. Visit our website at desjardins.com/ajusto for details. The personalized premium can go up or down depending on your driving behaviours and habits. The discount and the personalized premium do not apply to certain endorsements or additional coverages. Ajusto^® is a registered trademark of Desjardins General Insurance Inc., used under licence.