Are you buying a car but you’re wondering if you need insurance before purchasing? Well, that answer depends if you’re buying from a private seller or a dealership. We’ve created this guide to help answer all of your questions regarding the process.
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Do I Buy Car Insurance Before I Buy a Car?
This depends on how you decide to pay for your new or used car. There really is no escaping car insurance as it’s required by law but here is the jist of what you need to know:
- You'll need insurance upfront if you're financing or leasing a car
- If you're buying from a private seller, you'll need proof of insurance before registration
- Your insurance coverage depends on how you are paying for your vehicle
- If you have an existing policy, you'll need to speak with your insurance company to transition it to the new vehicle
In most cases, you cannot buy a vehicle without first purchasing car insurance. Well, technically you can buy a vehicle without insurance but if you’re purchasing a vehicle from a dealership they will not let you drive your car off the lot without insurance. If somehow you manage to purchase a vehicle without having auto insurance, you will need to get insurance before registering your vehicle. In Ontario, you cannot register a car without insurance. Without registration, you won’t be able to obtain a vehicle permit and you won’t be able to purchase license plates. These are all things that are required before you can legally operate a car in Ontario.
Proof of Insurance
The first step to getting your vehicle registered is obtaining car insurance. If you’re looking to insure your car in Ontario you will need an insurance policy with a minimum of $200,000 third-party liability coverage. Third-party liability coverage assures that you can pay damages if you’re found at fault in an accident that injures, kills, or damages another person’s property. Most insurance companies recommend at least $1,000,000 in liability coverage.
Once you have insurance coverage, you will be issued a pink slip which is used as proof of insurance. The pink slip should be kept in your vehicle at all times in case you get pulled over. The pink slip will also be used in the vehicle registration process.
Vehicle Registration
Buying a new vehicle from a dealer has its perks – they will usually take care of the licensing and registration, saving you the headache. If you end up buying from a private seller, you’ll be required to register the vehicle yourself. You can register your vehicle at your local ServiceOntario center and you’ll need to provide the following information:
- Proof of insurance
- Proof of purchase
- Vehicle permit
- Used Vehicle Information Package
- Drivers License
In order to complete the registration process and get your license plate sticker, you’ll need to make sure the vehicle is safetied. To get your vehicle safetied, you’ll need a mechanic to issue a Safety Standards Certificate which indicates the vehicle has been checked by an approved mechanic. The mechanic will also do a Drive Clean vehicle emissions test to ensure the car operates within the limits for greenhouse gas emissions.
Penalties for Driving Without Insurance
If you get pulled over and are caught driving a car without insurance, you will likely receive a fine. In Ontario, it’s the law to provide proof of auto insurance if you are stopped by a police officer. Here is the official law in Ontario:
Under section 2 of the CAIA:
2 (1) Subject to the regulations, no owner or lessee of a motor vehicle shall,
- operate the motor vehicle; or
- cause or permit the motor vehicle to be operated, on a highway unless the motor vehicle is insured under a contract of automobile policy.
If you’re driving someone else’s car and you can’t produce the pink slip for the vehicle, you can be charged with failure to produce an insurance card. The fine is pretty minimal, only $65, and will likely be waived if you appear in court with the pink slip.
Below we’ve listed the fines and penalties you can incur if you’re pulled over and can’t provide proof of insurance.
Fines
- First offence: $5,000 - $25,000
- Second offence: $10,000 - $50,000
Penalties
- Your driver's license could be suspended for up to 1 year
- Your vehicle could be impounded for up to 3 months
- The Provincial Offence Act can add an additional 25% to your fine
Using an Existing Insurance Policy
If you’re buying a new car and have an existing policy, there is a grace period of 6 – 14 days while you are registering your new vehicle. Driving under this grace period requires you to have your sales documentation and proof of insurance from your previous vehicle available in the event you get pulled over. If you don’t have these documents you may get fined, or worse, have a serious driving violation on your record.
To find out if you have this option, contact your insurance company or your insurance agent. They will tell you the details of the coverage and how long it lasts. If you decide to go down this route, you’ll need to be aware that the dealer may ask you to provide written proof from your insurance company that your new car will be temporarily covered. This is more likely to happen if the dealer is financing you, as most lenders and banks require proof of insurance coverage before you drive off the lot.
