Is One Way Car Insurance Enough For Canadians?

By Arthur Dubois | Published on 25 Jul 2023

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    Car insurance in Canada is mandatory for drivers. Several options are available, with the minimum being one way insurance. But is one way insurance enough? In this article, we’ll look at one way insurance and explore its pros and cons. We’ll also discuss the legal requirements for car insurance in Canada and provide tips on assessing your insurance needs. By the end of this article, you’ll know whether one way car insurance is sufficient for your needs.

    Understanding One Way Car Insurance

    Car insurance is an essential aspect of owning and driving a vehicle. No province or territory allows you to drive legally without minimum car insurance.  Mandatory minimum car insurance is sometimes called one way car insurance or basic car insurance.

    One way insurance provides financial protection so that you are not burdened with the costs associated with damages and injuries in the event of an accident. One way car insurance is a specific type of coverage that focuses on protecting you if you cause damage to another person’s property or injure them in a car accident.

    One way car insurance works by transferring the risk of an accident to the insurance company. Ideally, insurance aims to put you back into the same financial position you were in before the accident.

    When you purchase this type of insurance, you are essentially entering into an agreement where the insurer agrees to pay for the costs associated with damages or injuries you cause to another person or vehicle up to the coverage limit.

    Imagine you’re driving down the road, and you accidentally rear-end another vehicle. Without one way car insurance, you would be personally responsible for repairing the other person’s vehicle and any medical expenses they may incur due to the accident. However, with one way insurance, you can have peace of mind knowing that your insurer will handle these costs on your behalf up to the policy’s coverage limit.

    Some provinces and territories offer accident benefits with a one way insurance policy. Accident benefits provide insurance coverage for loss of income due to disability, funeral expenses, death benefits, income replacement and medical care. These benefits extend to you and others involved in the accident, such as passengers or pedestrians.   

    Many provinces offer Direct Compensation Property Damage (DCPD) as part of a one way policy. DCPD allows you to claim damages to your vehicle or property if you were not at fault. Your claim goes through your insurance company rather than the other driver’s.

    One way car insurance also has a provision for uninsured or unidentified drivers. You may be an accident victim of a driver without insurance or a driver who leaves the scene before you can get their information. In these situations, your one way policy provides you with coverage.

    One way car insurance is beneficial because it protects you from the financial consequences of causing an accident. It ensures you won’t have a hefty bill that could put you in a difficult financial situation. Transferring the risk to the insurance company lets you drive confidently, knowing you have a safety net.

    One way car insurance is the minimum car insurance you must have. The coverage limit determines the maximum amount awarded for damages or injuries in the event of an accident. Higher coverage limits provide greater protection but may come with higher premiums. It’s essential to strike a balance between adequacy and affordability.

    One Way Car Insurance Provincial Variations

    One way car insurance differs between provinces and territories. While there are similarities, your policy will fully explain your coverage type. For example, the amount of third-party liability may be different. Ontario’s one way policy has a maximum of $200,000 for third-party liability, while Manitoba has up to $500,000.  

    Provinces & TerritoriesOne Way Insurance Requirements
    Alberta$200,000 of Third-Party Liability insurance, Accident Benefits, Direct Compensation-Property Damage 
    British Columbia $200,000 Third-Party Liability, $200,000 Basic Vehicle Damage, Inverse Liability Protection and Underinsured Motorist Protection up to $1,000,000
    ManitobaUp to $500,000 Third-Party Liability, Personal Injury and All Perils
    Nova Scotia$500,000 Personal Liability insurance, Accident Benefits, Uninsured and Unidentified automobile coverage and Direct Compensation Property Damage
    New Brunswick$200,000 Third-Party Liability insurance, Accident Benefits, Uninsured and Unidentified automobile insurance and Direct Compensation-Property Damage
    Newfoundland$200,000 Third-Party Liability, Uninsured Automobile Coverage and Direct Compensation-Property Damage
    Northwest Territories$200,000 Third-Party Liability coverage, Accident Benefits, Uninsured/Unidentified automobile coverage
    Nunavut$200,000 Third-Party Liability coverage, Accident Benefits, Uninsured/Unidentified driver coverage
    Ontario$200,000 Third-Party Liability Insurance, Accident Benefits, Uninsured Automobile Insurance and Direct Compensation-Property Damage
    Prince Edward Island$200,000 Third-party Liability Insurance, Accident Benefits, Uninsured Automobile Insurance and Direct Compensation-Property Damage
    Quebec$50,000 Civil Liability, No-Fault coverage included in the cost of driver’s license covering bodily injury and death due to an accident
    Saskatchewan$200,000 Third-Party Liability Insurance, Accident Benefits or Tort Injury Coverage, Basic Auto Damage Insurance
    Yukon$200,000 Third-Party Liability coverage, Accident Benefits, Uninsured/Unidentified driver coverage

    Two way car insurance is additional insurance you can purchase to protect your car in the event of damage from a collision, fire, or other named perils in your policy. Two way insurance can also cover the theft of your vehicle, loss of use of your car if it’s stolen or being repaired due to an accident, and damage due to weather such as hail.

    Comparing One Way and Two Way Car Insurance

    One way car insurance is the minimum amount of insurance you need to drive legally in Canada. It provides third-party liability coverage if someone sues you because of an accident. Some one way policies will cover damage to your car if you’re not at fault. But, if you are responsible for the damage, it will not be covered. Two way car insurance protects you and your vehicle for damages, regardless of who’s at fault.transition paragraph 

    Coverage of One Way Car Insurance

    One way car insurance provides coverage for damages or injuries you cause to other people or their property. It offers financial protection in an accident where you are at fault. This coverage is mandatory in most Canadian provinces and territories.

    Regarding one way car insurance, it is important to understand that it primarily focuses on providing liability coverage. Third-party liability coverage protects you from the financial burden of paying for damages or injuries caused to others rather than protecting your vehicle. In an accident where you are at fault, this type of insurance will cover the costs of repairing or replacing the other person’s vehicle and any medical expenses they may have incurred. However, the compensation to the third party will only be as much as the policy’s maximum limit.

    It is worth noting that one way car insurance typically only meets the minimum legal requirements the government sets. While it provides essential coverage, it may not offer the same level of protection as comprehensive insurance.

    Coverage of Two Way Car Insurance

    Unlike one way car insurance, two way car insurance, also known as comprehensive coverage, provides additional protection for your vehicle. It covers damages caused by accidents, theft, vandalism, and other unforeseen events. This type of coverage is optional in all provinces but is highly recommended, especially if your vehicle is valuable.

    When you opt for two way car insurance, you safeguard yourself against liability and protect your investment. So, in the unfortunate event of an accident, you can have peace of mind knowing that you can repair or replace your vehicle, regardless of who is at fault. Comprehensive coverage typically includes protection against damage caused by natural disasters, such as hail storms or floods, and coverage for fire-related incidents.

    Furthermore, two way car insurance often includes additional benefits such as roadside assistance, which can be incredibly helpful in a breakdown or other emergencies. This type of coverage may also cover personal belongings stolen from your vehicle or damaged during an accident.

    The cost of two way car insurance is generally higher than that of one way car insurance because it provides additional coverage. Comparing costs between insurance providers or costs between policies for provinces with government insurance can help you save money. However, the peace of mind and greater protection can be worth the investment, especially for those who own expensive or valuable vehicles.

    Pros and Cons of One Way Car Insurance

    Benefits of One Way Car Insurance

    One way car insurance provides you with the minimum coverage required by law to drive legally. It protects you financially in an accident where you are at fault. One way car insurance is cheaper than two way coverage, making it a popular choice for budget-conscious drivers.

    Drawbacks of One Way Car Insurance

    While one way car insurance has its benefits, it also has its limitations. The main drawback is that it doesn’t cover damages to your vehicle if you are at fault, the damage occurs because of vandalism or a natural event, or your vehicle is stolen.  If you’re involved in an accident that’s your fault or your car is stolen, you must cover the financial loss.

    Assessing Your Car Insurance Needs

    Factors to Consider When Choosing Car Insurance

    When assessing your car insurance needs, you must consider several factors. These include your vehicle’s value, driving habits, financial situation, and risk tolerance. Understanding these factors will help you determine whether one way car insurance is enough coverage for your circumstances.

    When is One Way Car Insurance Enough?

    One way car insurance may be enough for you if you have an older vehicle with minimal value or are on a tight budget. However, if your car is new or valuable, or you frequently drive in high-risk areas, consider comprehensive coverage to protect your investment.

    One Way Car Insurance in Canada: The Bottom Line

    One way car insurance provides the minimum required coverage in Canada, but you may need more than this. It’s essential to assess your car insurance needs based on your vehicle, driving habits, and financial situation. While one way car insurance is more affordable, it doesn’t protect your car if you have an accident or if it’s stolen, vandalized or damaged by natural events. Consider your circumstances carefully before making a decision, and remember that it’s always better to be over-insured than under-insured when it comes to car insurance.

    FAQs About One Way Car Insurance in Canada

    What is one way car insurance in Canada? 

    “One way” car insurance in Canada refers to the minimum required coverage for drivers, which is third-party liability insurance in most provinces. Third-party liability insurance covers damages and injuries to others in an accident where you are at fault. The policy protects you from the financial implications of such an event, fulfilling your legal obligations to cover costs associated with damage or injury to others.

    What does one way car insurance cover in Canada?

    One way car insurance in Canada typically covers injury or death to another person or damage to another person’s property. However, it does not cover damage to your vehicle in the event of an accident. It’s designed to protect other road users from any loss they may suffer due to your actions.

    What is the difference between one way and two way car insurance in Canada? 

    The main difference between one way and two way car insurance in Canada lies in the extent of coverage. While one way insurance covers the liabilities towards others if you are at fault in an accident, two way insurance also extends coverage to your vehicle. This additional protection includes instances where your car might be damaged in an accident (regardless of fault) or due to other circumstances such as theft, fire, or natural disasters.

    Is two way car insurance worth it in Canada?

    Whether two way car insurance is worth it in Canada depends on several personal factors. These include the value of your vehicle, your financial capability to bear unexpected repair or replacement costs, and your risk tolerance. If you have a high-value car, the additional coverage provided by two way insurance can be beneficial. Similarly, two way insurance might be worth the extra cost if you’d prefer the peace of mind knowing you’re covered for a broad range of incidents. However, if your vehicle is older or of lower value, the cost of two way insurance might not be justified. The decision ultimately rests on an individual’s situation and preferences.

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    Arthur Dubois is a personal finance writer at Hardbacon. Since relocating to Canada, he has successfully built his credit score from scratch and begun investing in the stock market. In addition to his work at Hardbacon, Arthur has contributed to Metro newspaper and several other publications