Temporary Car Insurance in Ontario: What you need to know in 2023

Temporary car insurance offers short-term coverage that can help bridge gaps between long-term policies or serve as a solution when conventional vehicle insurance is too costly. It’s commonly used by drivers who only occasionally drive a vehicle or those who need to insure a rental car. For example, you may have a classic car you only drive in summer. Temporary car insurance typically lasts for 30 days or less. 

Unfortunately, temporary car insurance isn’t available in Ontario. The province’s current auto insurance program is designed only to offer traditional car insurance policies. However, there are options for drivers who need temporary coverage in Ontario. Read on to find out what they are and how they work.

What is Temporary Car Insurance?

Driving without car insurance in Ontario is strictly forbidden. You’ll receive fines and potentially have your license suspended if caught. However, only some people want to commit to a one-year plan. This is what leads people to search for temporary car insurance. 

Temporary car insurance is short-term coverage that provides drivers protection for an allotted period, usually 30 days or less. It’s useful when you’re only planning to use a car briefly. For example, you may sell your car soon or use a carsharing platform. In these cases, paying an annual subscription that assumes you’ll drive daily doesn’t make sense. 

The primary benefit is receiving comprehensive coverage without committing to a full-year package. As a result, you’ll receive the most flexibility. However, you’ll generally need to pay higher monthly premiums. In addition, most policies come with higher deductibles and fewer benefits than a standard plan. 

Six Alternatives to Temporary Car Insurance in Ontario

Although temporary car insurance is unavailable in Ontario, some short-term options can provide drivers with the necessary coverage without breaking the bank. Furthermore, it is essential to research all available options before making any decisions to ensure you get the right type of policy at the best price possible.

1. Pay-As-You-Go

Private insurers offer usage-based insurance plans as one option. These policies reward drivers who drive less frequently, with premiums determined by the number of kilometres driven annually. Therefore, individuals who use their cars only occasionally or for shorter distances may find this a beneficial choice.

CAA MyPace is a pay-as-you-go insurance program that uses a plugged device to track your mileage and adjust your rate based on how often you drive and how many kilometres. CAA designed this program for drivers who drive less than 12,000 kilometres per year. The cost of MyPace varies depending on how much you drive. 

2. Six-Month Policies

Next, some auto insurers may also offer six-month policies. While these are rare, they’re suitable for those who plan to own and operate a vehicle for a medium term. These policies have a reasonable monthly premium with the ability to cancel early. Just note that switching your car insurance or cancelling early will likely result in fees. 

3. Drive Someone Else’s Car

You can be listed as a named driver on someone else’s policy and use their car. This means you will be legally allowed to drive their car and covered under their insurance policy. Young drivers commonly use this method when driving their parent’s car. You’ll have your name removed from coverage when you want to end your policy. While this is a streamlined process, the primary driver will likely need to retain their policy. 

4. Ontario’s 10-Day Temporary Special Permit 

If you need to use a car for ten days or less, you can apply for a special temporary permit from the province’s Ministry of Transportation. This permit allows you to operate a vehicle that isn’t insured legally. You can also use it in an emergency, such as when your regular policy expires or if you’re driving a rental car for less than ten days.

Note that this permit does not cover damage to other vehicles or property. It merely removes the legal requirement to drive with an insurance policy. However, you may still be required to prove financial responsibility in the event of an accident. In Ontario, you can do this by providing proof of a valid insurance policy or a government-approved security deposit.

5. Rental Car Insurance

Rental car insurance is an insurance policy that provides coverage for rental cars. This policy is designed for drivers who rent cars regularly. The rental car insurance cost varies depending on the company and your coverage. Some rental car companies that offer this policy include Enterprise Rent-A-Car and Hertz Rent-A-Car.

a) Credit Card Rental Car Insurance

Many travel credit cards also include short-term rental car insurance. This insurance can cover you while operating a rental vehicle if you use the card to pay for the car rental. Note that these policies may not provide comprehensive coverage and are often limited in duration.

6. Early Cancellation

Finally, you can cancel your standard car insurance policy early to effectively create a short term-policy. For example, you can cancel your six-month policy after three months. It’s important to remember that cancelling a car insurance policy early may result in fees or deductions from the refund amount.

Ontario’s Strict Insurance Regulations

Ontario has some of Canada’s strictest auto insurance regulations, so temporary car insurance isn’t available in the province. The Ontario government’s auto insurance program is designed only to offer traditional policies and not permit drivers to purchase short-term coverage. The province has implemented this to protect drivers from taking on more risk than they can handle and ensure that all insured vehicles have appropriate protection, even when driven infrequently.

The Financial Services Commission of Ontario (FSCO) regulates the province’s auto insurance industry, overseeing insurers and brokers, setting rates, and managing disputes between consumers and providers. They also monitor policy trends to detect potential risks or issues that could negatively affect the system or disrupt the market. This regulation helps ensure that drivers are not overpaying for coverage. It will also protect you from exposure to excessive risk due to inadequate protection.

To ensure that these regulations are adhered to, FSCO requires all insurers to provide detailed reports on their policies, including information on how much coverage each plan offers and what type of incidents it covers. This helps them identify gaps in coverage or policies that may be too expensive for specific drivers before they become an issue. As a result, temporary car insurance is not allowed in Ontario due to its lack of comprehensive protection compared to traditional policies.

Comparison with Other Canadian Provinces

Provinces offering short-term car insurance

In British Columbia, You can obtain a Temporary Operation Permit (TOP) for one to 15 days. Additionally, there is an option to get a TOP for three to 11 months, which provides insurance coverage for test driving, transportation, or transferring ownership of a vehicle. It is also possible to purchase additional protection from a private insurer.

Manitoba also offers permits that can be valid for one to 30 days. These permits come with basic or optional coverage. However, you will also have to pay a 5% surcharge. Manitoba residents are allowed to apply for a maximum of three temporary permits per vehicle annually.

Saskatchewan drivers can get temporary permits for unregistered vehicles to cover their drives within the province. These permits are available for up to eight days.

Finally, Quebec has a public provincial insurance system and offers temporary permits ranging from 12 hours to one month. Local dealers or SAAQ (la Société de l’assurance du Québec) can issue these permits. However, no companies are offering temporary permits for less than six months.

Provinces without short-term car insurance options

Although Alberta does not provide temporary car insurance options, they offer a special in-transit permit that allows using an existing plate and registration for up to 14 days. However, this permit does not include Alberta car insurance. The province only offers insurance policies for six months or more.

In Nova Scotia, very few insurers offer short-term policies. Typically, you would need to purchase a six-month or annual policy. Cancellation and refund policies vary depending on the insurance company.

While obtaining temporary insurance in New Brunswick offers options, the duration is not shorter than six months. In most cases, individuals would need to purchase a full-term policy and cancel it early, which may result in cancellation fees based on the terms and conditions.

The Bottom Line: Temporary Car Insurance in Ontario

In conclusion, while temporary car insurance may not be available in Ontario, several short-term options can provide drivers with the necessary coverage. Comparing car insurance policies is essential to find the best solution for your needs and budget constraints. Ultimately, by taking advantage of these different options, drivers can be protected against any potential risks on the road.