Car insurance is required by law across Canada, whether you’re leasing, financing, or buying a vehicle outright. Choosing to lease or finance a vehicle (rather than purchasing it outright) likely won’t have an impact on your premium, but the types of coverage you require may be different in each of these situations.

Here are the 6 basic types of car insurance coverage available in Canada:

1. Third-party liability coverage. This is designed to protect you if you’re legally responsible for injuries or damage to someone else’s property in a collision.
2. Accident benefits coverage. This helps you through the recovery process if you’re injured in an accident, and could include coverage for things like income replacement and medical expenses.
3. Uninsured motorist coverage. This protects you if you’re involved in an accident caused by a driver who doesn’t have liability insurance coverage (or if their coverage is insufficient).
4. Collision coverage. This covers the cost of repairing or replacing your vehicle if you’re involved in a collision. You may be able to choose different deductibles for collisions that are your fault and collisions that are not your fault.
5. Comprehensive coverage. This covers damage to your vehicle that was not caused by a collision. It could include damage caused by vandalism, falling objects, fire, theft, lightning, windstorms, earthquakes, and more.
6. Additional optional coverages. Talk to your broker about other optional coverages for things like rental vehicle costs, roadside assistance, and more.

Across the country, third-party liability, accident benefits, and uninsured motorist coverage are mandatory for all drivers (except in Newfoundland, where accident benefits coverage is optional). However, if you’re leasing or financing your vehicle, the company you’re borrowing from may require you to purchase additional coverage that is optional when you own your vehicle.

Generally speaking, these are the coverages you’ll need if you lease, finance, or buy your vehicle outright:

The coverage provided under each of these categories is subject to the limits set out in your policy, and the minimum limits for the mandatory coverages vary across the country. You may wish to increase your limits to allow for more protection.

Even though leasing or financing your vehicle won’t affect the cost of your insurance, it’s important to tell your broker which route you take, as it could have an impact on how your claims are paid out (if you’re financing your vehicle, for example, the company you’re borrowing from would likely receive a portion of the claim payout).

Whether you’re shopping for a new ride or it’s just been a while since you’ve reviewed your existing policy, reach out to your licensed broker today.