How does car insurance work in BC?

Car insurance plays a crucial role in ensuring the safety of drivers and even pedestrians on the road. It is a financial safety net in an accident or an unforeseen event such as a break-in or car theft. Although you may view car insurance as just another bill, it is essential to understand how it works, and what is and isn’t covered. 

What is Car Insurance and is it Mandatory?

In essence, car insurance is a contract between a policyholder (you) and an insurance company that provides financial protection against damages resulting from accidents, thefts, or other covered incidents. In BC, car insurance is mandatory to have, by law, when operating your vehicle.   

Coverage for each driver varies. However, every driver requires basic insurance coverage through the Insurance Corporation of British Columbia (ICBC). In addition to basic liability coverage, you can add various levels of optional insurance tailored to your needs.   

Your basic insurance policy covers things like third-party liability coverage that protects you if you’re responsible for an accident up to a certain amount, Enhanced Care, where you and your passengers can access medical and rehabilitation benefits after an accident, and underinsured motorist protection in the event you’re in an accident with someone who doesn’t have enough insurance to cover the amount of damages. In addition to the basic options, there are optional coverages listed below.   

How Does Car Insurance Work in BC? 

It’s important to note that each provincial government in Canada runs its insurance program differently. The main thing to note in BC is that it operates under a public insurance model, with ICBC providing basic coverage for all drivers. Secondly, it operates under an Enhanced Care model, which emphasizes a no-fault system where anyone in an accident can access medical benefits no matter who is at fault for the accident.   

Car insurance also has a regulatory body that oversees brokers and adjusters to ensure they comply with professional standards. Finally, the BC government plays a vital role in the policy and regulation setting to ensure that the insurance market operates in the public’s best interest.  

What is Public Car Insurance?

ICBC provides public car insurance. It includes the minimum insurance required by law to operate a vehicle. Although ICBC offers optional coverage, you can shop around for this coverage with privately owned insurance companies.  

Your insurance broker will set up your mandatory ICBC coverage directly on your behalf. If you choose to purchase additional comprehensive insurance, they will be able to set this up for you as well.  

It is important to note that private insurance is not offered at every insurance brokerage, only those with contractual agreements to sell them. If you’re interested in a specific private carrier, you should confirm online ahead of time which brokerage sells that coverage.  

What is Private Car Insurance?

Private insurance companies such as Stratford, Family Insurance Solutions, and BCAA offer private car insurance. While ICBC provides basic coverage, individuals can add optional coverage from private companies to protect themselves from accidents or unforeseen events.   

Examples of optional coverage that Park Insurance can set you up with are:  

Collision

Covers your repair costs when you hit another vehicle, object, or surface on the road that causes damage. This would also cover you if you were hit by another car.   

Comprehensive

Covers non-collision damages that can happen in several ways, such as chipped windshield damage from a wind or hail storm, theft, fire and hit-and-runs.  

Replacement Cost Coverage

Three replacement cost coverage options are available if your car is in an accident or stolen. These coverage types protect your investment in your vehicle should it need a repair or be deemed totaled or missing.   

The first option is New Vehicle Replacement Plus, only available for cars made in the last two years. The next type is Limited Depreciation Endorsement, suitable for vehicles older than two years. Finally, some private insurance companies offer a plan in the middle of the first two, called Replacement Cost Coverage.   

If you are interested in any of these, your broker can help guide you to the best option.   

Loss of Use

If you have an instance where your car is not drivable, your loss of use coverage will cover up to a certain amount for you to rent a car of equal or lesser make and model to yours. If you rely on your vehicle for essential things like work, or driving children around, this policy is essential. Your insurance broker will be able to guide you in selecting an appropriate limit of Loss of Use depending on the average wait time for vehicle repairs.  

Extended Third-Party Legal Liability

This optional insurance provides additional protection beyond what’s covered in your basic insurance coverage. For example, your basic insurance could cover you for up to $200,000 in the event of an accident, and this option could top you up to $5,000,000 in protection for most people and $10,000,000 for specific commercial vehicles.   

Third-Party Liability Coverage protects policyholders from potential financial hardships resulting from at-fault accidents. This coverage extends its shield to cover medical expenses, property damage, and legal fees incurred by third parties in the unfortunate event of a collision.   

You could also consider a situation in which someone is involved in a single-car crash and inadvertently causes damage to someone’s property, such as driving into a house or storefront, resulting in significant damages. There have been cases where damages in a situation like this could total up to $500,000, but with Third Party Liability, this cost would be covered.  

Without this coverage, individuals could be exposed to substantial financial liabilities and even legal consequences if the area you’re in permits other drivers or people involved to sue.   

Additionally, the Inverse Liability Protection protects you in other parts of Canada and the U.S. where their laws don’t allow you to make a claim against the party who caused the crash. If you opt in for the coverage, your repair costs are covered up to 100% and are determined based on what percentage of the crash was your fault. I.e., if you were 50% responsible, 50% of your repairs would be covered.  

How are Car Insurance Premiums Calculated?

In short, the goal of an insurer giving you a car insurance policy is to determine the likelihood of you submitting a claim and the cost of the claim. Coverage varies from person to person, but some of the factors include: 

  • Driving experience – If you have only had your licence for a short time, your insurance premiums will be higher due to an increased likelihood of accidents. The more years of driving experience you have under your belt, the higher the discount you will be eligible for, as long as you continue to be a safe driver. 
  • Crash history – This is factored in for anyone you list on your insurance policy. The more crashes a person causes, the higher the insurance premium. 
  • Who drives your car – If you list anyone who has minimal driver experience, or someone who has caused some accidents, these factors will increase your premium. 
  • Usage Patterns – Annual mileage and the vehicle’s use can affect your premium If your car is going to be used commuting every day, there is a higher chance of an accident, and if it is used for leisure, it will likely decrease.   
  • Vehicle type – High-performance or luxury cars will always have higher premiums due to the increased repair costs.  
  • Location – Depending on where the vehicle will be primarily parked and driven affects your rate. If this area is one where accidents happen often, your rate will go up; if it is an area with fewer accidents, your premium will go down.   
  • Your level of protection – the more optional coverage that you opt-for, the more protected you are, but that also means your premium will be higher.  

The Unlisted Driver Protection coverage with ICBC allows any friends or family who do not live in your home to drive your vehicle up to a maximum of twelve times per year without being added to your policy. In the case there is an accident, they will be covered, however, you must pay for the Unlisted Driver Protection coverage after the first accident. It is important to note that household members do not count under this policy and should always be listed on your policy. In the event an unlisted member of your household drives your vehicle and gets in an accident, you could be responsible for an expensive bill from ICBC. 

How Do I Get Car Insurance?

At Park, we make getting insurance easy for you. Our Insurance Brokers will walk you through all your insurance options and determine what coverage you need. From there, your broker will arrange your basic insurance through ICBC and find you pricing for any optional coverage you are interested in. To get started, fill out the form on this page and one of our brokers will connect with you! All you will need to get started is a valid driver’s license.   

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