Is It Important to Have Car Insurance?
The short answer to this question is – YES, YES, YES and YES!
Under no circumstances should you ever drive a car, truck, or any other kind of motorized vehicle when there is even a hint of doubt as to whether proper insurance is in place. The consequences to you could be disastrous. Let me count the ways:
1. Enormous Fines
In Ontario, auto insurance is mandatory. Every vehicle must carry a minimum liability policy limits of $200,000. There is even a piece of provincial legislation called The Compulsory Automobile Insurance Act (CAIA). The name says it all – automobile insurance is compulsory. Section 2(1) of the CAIA provides that no one who owns or leases a motor vehicle can operate it without insurance, or cause or permit it to be operated by someone else. A first time offender is subject to a minimum fine of $5,000, and a maximum fine of $25,000. On a subsequent conviction, the minimum fine jumps to $10,000 and a maximum of $50,000. These penalties exceed most other penalties a regular citizen is ever likely to face and is meant to be powerfully persuasive encouragement to comply with the law. These penalties are just the beginning. The increased cost of obtaining car insurance, after a conviction for not having insurance, is staggering.
Don’t do it!
2. If you don’t have insurance, you cannot sue another driver who is at fault for any accident in which you’ve been involved.
No one I meet has ever heard about the provision in section 267.6(1) of the Insurance Act which provides that anyone contravening section 2(1) of the CAIA forfeits the right to sue another motorist, if the uninsured driver is completely at fault. This applies whether or not you’ve actually been prosecuted or convicted under the CAIA. Think about that for a moment. You don’t have insurance, your spouse isn’t home and you need something really quick from the local variety store. You drive the uninsured car that’s parked in your driveway “just this one time” to pick up something and while stopped at a red light, a transport truck drives into the back of your car, leaving you a quadriplegic. Because you don’t have auto insurance, you cannot sue for any of your losses.
Don’t do it!
3. Without insurance, you cannot access all of the statutory accident benefits you need.
Ontario has a blended system of no fault benefits (also more formally called statutory accident benefits, or SABS for short) and tort system, whereby at-fault drivers may be sued for losses caused by their negligence. In addition to having the right to sue removed if you are driving without insurance, your SABS entitlements are also negatively impacted. There is a general exclusion in section 31(1) of the SABS which provides that if a driver knew or out reasonably to have known that he or she was operating the automobile when it isn’t insured, that driver is no longer entitled to:
- Income replacement benefits (a weekly payment to offset income losses if your injuries keep you off work)
- Non-earner benefits (a weekly benefit not anchored to employment income)
- Lost educational expenses
- Expenses of visitors
- Housekeeping and home maintenance benefits
Don’t do it!
Having your own policy of insurance in place also allows you to customize your accident benefit package so that it is tailored to your personal needs. I discussed the topic of optional benefits in my blog, “Optional Statutory Accident Benefits – What You Need To Know“.
4. Personal exposure if you are at-fault
If you drive a car without insurance and cause an accident, you can face personal exposure for the other injured party’s losses. While our system does have some built in protections for that other driver/pedestrian/cyclist that you hit, if you have assets or a job, you sure wouldn’t want to rely on the mere hope that other insurance might step in to protect the injured claimant. Imagine the stress you’d feel knowing your home, business, farm, or cottage could be liquidated to pay a damage award.
Don’t do it!
How Should I Protect Myself?
There is an insurance endorsement that I carry and which I strongly recommend other motorists purchase, for a very modest premium cost, which is known by its endorsement number as OPCF 27. The long form title is “Liability for damage to non-owned automobiles(s), and other coverages when insured persons drive, rent or lease other automobiles”
This extends liability coverage, SABS coverage, and other coverages for losses suffered when operating a non-owned automobile. Whether you rent a car or borrow someone’s car the OPCF 27 endorsement ensures that you are covered with all the same insurance protections that would otherwise apply to your own insured automobile (subject to a couple of minor limitations such as only applying to vehicles of 4,500 kilograms or less in weight, so don’t borrow a school bus sitting in a junkyard). If you rent a car just once in a year, you’ll recoup the cost of this additional insurance coverage that the rental car companies always want to sell you.
Sadly, I encounter more people than I should who decided to drive without insurance. It never ends well. Do not ever let yourself be a member of this group!