Uninsured motorist coverage 101: What you need to know

Yes, but the bad news is not everyone follows the rules. It’s estimated that there are more than 2,000 uninsured vehicles on the road in Ontario alone. If you’re unfortunate enough to be involved in a collision with the driver of one of those vehicles, it is a headache. (Read our guide to getting the best car insurance in Canada.)

The good news is uninsured motorist coverage is a mandatory part of your auto insurance policy. And even the most basic of insurance policies has your back. “If you have a basic policy, you’re going to be covered,” says Pete Karageorgos, the director of consumer and industry relations at the Insurance Bureau of Canada. 

What is covered by uninsured auto insurance? 

Uninsured auto insurance protects you from injuries and damages sustained through the fault of a driver who is uninsured or unable to be identified (in the case of hit-and-runs). It allows drivers to receive money—typically up to $200,000—that would have otherwise legally been recovered from the other driver’s insurance policy. 

Injuries caused by another at-fault driver are typically already covered under your policy’s accident benefits (a mandatory coverage in every province except Newfoundland and Labrador). Uninsured auto coverage is designed to address injury costs that may be over and above your own accident benefits limits. 

It can also protect you from damages to your car or property. However, damage claims are handled differently depending on your province of residence, and whether the at-fault driver can be identified—allowing you to confirm that they do not have insurance—or has fled the scene. (We cover what you should do if the other driver refuses to provide you with their insurance information, below).

Although uninsured motorist coverage is part of a standard policy, coverage limits can vary by province and type of claim, so check with your provider or broker to make sure you understand every facet of your policy. For example, in Alberta, you may only be covered for damages if you carry additional collision coverage. 

What about a hit-and-run scenario, when the other driver flees?

Hit-and-run insurance coverage can get a bit tricky. 

“The distinction for hit-and-run scenarios depends on what you’re claiming. If your vehicle is damaged in a hit-and-run, there is no coverage for the damage under the uninsured auto coverage,” says Adam Mitchell, president of Mitchell & Whale Insurance Brokers Ltd in Whitby, Ont. “You need collision or all perils coverage to cover the damage to your car.” (All perils is also referred to as comprehensive insurance.)

According to Mitchell, this is the more common scenario insurance companies encounter, and hit-and-runs tend to happen with parked, unoccupied vehicles where no one is around to witness the accident. 

However, if you happen to be injured from a hit-and-run, you can still access coverage through uninsured auto insurance. It offers additional protection in cases where your injuries exceed what is already included in the accident benefits portion of your policy. “Should an injured party exhaust their accident benefits limits, they could then claim from the $200,000 uninsured auto coverage even in a hit-and-run,” says Mitchell. 

Why is motorist protection mandatory in Canada? 

The intention behind mandating uninsured auto protection is that no victim is left without access to funds. “Without this coverage, accident victims would be left to sue the stranger that hit them, and that stranger may not have any assets,” says Mitchell. “In the event they do not, the victim would be left without access to funds to pay for damages or injuries.” 

Uninsured auto insurance also ensures you receive funds quickly. Think: If you’re a victim and you’re left having to pay for loss out of pocket, it may take you months or years in court to get those funds back. Instead, you can claim immediately from your own insurance company, so you’re taken care of quickly. 

How much does uninsured auto insurance cost?

The cost of uninsured motorist coverage varies from policy to policy just as all other coverages do, but it typically represents a nominal portion of your annual premium, often coming in at less than $25 to $50 per vehicle annually.

What happens if you drive without insurance?

If you’re ever thinking of driving without insurance, spring for an Uber instead. “It’s a major offence with serious implications, including a $5,000 fine under the Compulsory Automobile Insurance Act (CAIA),” says Mitchell. “It will also affect your eligibility with many insurance companies.” So, when you look to get insurance in the future, you can expect to pay well above your previous rates. Translation: Sky-high rates.

What happens if you drive without insurance and get into an accident?

If you’re at fault, it will hurt. “You could end up being sued by the victim of the accident and/or their insurance company,” says Mitchell. “When an insurance company pays their customer under the uninsured auto coverage, they may then go after you to recover their losses.”

Even if the accident isn’t your fault, you’re in trouble if you don’t have insurance. “You may still be subject to fines under the CAIA,” says Mitchell. “You also would have no right to recover for your damages or injuries since The Insurance Act prevents uninsured drivers from recovering funds even if they are not at fault for the accident.”

If you are involved in a hit-and-run accident and you’re not able to get the insurance info from the other driver because they fled, first and foremost, call the police. “You’re legally obligated to stay at the scene of an accident,” says Karageorgos. “If someone doesn’t stop, that’s a red flag—they may be under the influence or uninsured.”

He also recommends recording as many details as you can and taking photos and videos. “Being in a collision is a stressful and traumatic event, so you want to have those details available when the police or your insurance company needs them.”

Make a record of everything that happened so you don’t forget, including notes on the location and which way the vehicles were travelling. Note the details about the vehicle itself, like the make, colour and model, any identifiers (like a bumper sticker or broken tail light) and if there were any passengers. 

What if someone refuses to give their insurance info?

If someone doesn’t want to provide their insurance information, contact the police. In an automobile accident, drivers are obligated by law to exchange insurance information. In the meantime, safely obtain whatever information you can, such as a licence plate, and a description of the vehicle and the driver. Often a plate number and vehicle description can be used to locate the insurance associated with the plate. All of this is after the fact, we know. Again, try to remember as many details as possible so you can to pass them along to the police. 

Making a claim with uninsured auto insurance

Call your broker or insurer as soon as possible, before fixing your car or incurring large expenses. Of course, it’s OK to do what is reasonably necessary to get yourself safe or to follow a doctor’s orders. Remember, your insurance company has the right to evaluate all elements of the claim before issuing a payment to you. The sooner you make your insurer aware, the sooner you can expect to receive your benefits.

Know that an uninsured auto claim will take time and require documentation. As noted above, write everything down, take photos and collect witnesses’ contact information too, if you can. 

Expect your insurance coverage to have limits. Uninsured auto limits are quite low. If you want to make sure all potential costs of an accident are covered, you can buy higher limits on other types of coverage, such as collision and comprehensive (before a claim happens, of course). This reduces the chances that your actual loss will exceed the standard benefits. 

If you’re at fault for an accident, you’ll likely see changes to your rate on renewal—unless you bought a policy with accident forgiveness. An insurance broker can shop the market for you and make sure you get the best rate available. If you’re not at fault, you shouldn’t see your rates affected, so you can focus on your road to repairs and recovery.

But of course, worry about the afterwards, afterwards. Take care of yourself now and get a broker that can help you secure the right coverage to take care of you later. 

More on auto insurance:

• Everything you need to know about your car insurance deductible

• Can you get affordable car insurance after a DUI?

• What is no-fault insurance? Why do you need it?

• Accident benefits have you covered—but for what, exactly?