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 If you compare car insurance in Canada against the United States, you will find that they are generally similar, but that our colder, northern neighbor carries a few tighter regulations that the USA does not. 

Like the United States, Canada’s auto insurance regulations are handled by the provinces, rather than by the national government.  Most provinces require the purchase of auto insurance from private companies, but three provinces (British Columbia, Saskatchewan and Manitoba) require drivers to purchase insurance from a provincial government-run insurance program, which are linked to the driver’s license and vehicle registration programs as well.  These insurance funds are self-sustaining, with no help from the taxpayers, and reportedly break even over time.

Unlike the United States, injury protection is required in all Canadian provinces.  Property damage requirements range approximately from $10,000 to $20,000, depending on the province.  Bodily injury liability requirements in Canada are beyond compare.  Car insurance companies in nearly all Canadian provinces require a minimum of $200,000 worth of coverage (the exception is Quebec, which only requires $50,000 liability minimums).  Interestingly, the two United States that share identically high liability minimums are Canada’s closest neighbors, Alaska and Maine.

The provincial governments of Canada also require out of work benefits (typically a percentage of your pre-tax income for a limit as high as two years) and funeral benefits in various capacities.  Liability Insurance Supplements, (or “top-ups”) which include protection from theft and damage, are optional pieces of coverage for which private and public insurers are allowed to compete.

Overall, the cost of car insurance in the Canadian provinces is approximately the same as the cost of car insurance in the United States despite the seemingly stark differences in state requirements.  The market-selected demand for comprehensive coverage in the United States tends to raise the average policy much further beyond the low state minimum requirements, so ultimately it is very unfair to compare care insurance policies by their state requirements.

This Financial Services article was written by Mark Karavan on 10/14/2009

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