Unless you’ve ever come across the terms before or are familiar with the industry, you might have no idea of the difference between one-way car insurance and two-way car insurance. This is an important thing for any driver in Canada to know, as, without this knowledge, you could unknowingly end up with the wrong coverage for your vehicle, lifestyle, and financial situation.
To keep that from happening, this article explains the difference between one- and two-way car insurance, which is cheaper, and if one is more worthwhile than the other. With that information, you can then make an informed decision regarding your needs and budget.
What Is One-Way Car Insurance?
By definition, one-way car insurance is a basic type of car insurance that covers the costs associated with the damage or injuries you cause to others in an at-fault accident. As for you and your vehicle, only what is mandated by law will be covered, and even then strict coverage limits are common. Think of it this way, the term “one-way” reflects the fact that the coverage extends primarily in one direction – to the other driver.
One-Way Car Insurance in Ontario
If you live in Ontario, the Insurance Bureau of Canada states that a one-way car insurance policy must include four types of coverage:
- Third-party liability coverage ($200,000 minimum)
- Direct compensation – property damage
- Accident benefits
- Uninsured automobile coverage
This will protect you against damages or injuries you cause to others and provide benefits for any injuries you sustain in a collision. In the event the collision is not your fault though, you should expect damage to your vehicle or its contents to only be covered up to your policy’s limit. Given the limited nature of one-way car insurance, it is considered the bare minimum for drivers to have in Ontario and is typically considered a “basic” policy.
One-Way Car Insurance in Quebec
If you live in Quebec, you are required to obtain a car insurance policy with a minimum of $50,000 in civil liability coverage from a private insurance company. When you do, your insurer will provide coverage through the standardized “Quebec Policy Form.” Section A of this policy form is mandatory for all car owners and covers the minimum civil liability coverage requirement. As such, Section A is considered one-way and would be the bare minimum for drivers to have in Quebec.
What Is Two-Way Car Insurance?
If one-way car insurance primarily extends in one direction – to the other driver – two-way car insurance provides coverage in both directions. It includes everything one-way does and more. It covers not only the costs associated with damage or injuries you cause to others in an at-fault accident but also you and your vehicle. Because it is more comprehensive, two-way car insurance often includes some, if not all, of the following types of coverage to varying extents.
- Third-party liability coverage: Collision-related damages and injuries to others
- Collision coverage: Collision-related damages to your car
- Comprehensive coverage: Non-collision-related damages to your car (ex. Theft, vandalism, fire, falling objects, extreme weather, etc.)
- Uninsured motorist protection: Damages or injuries caused by collision with an uninsured driver
- Accident benefits: Collision-related medical and rehabilitation expenses
- Direct compensation – property damage: Collision-related damages when another driver is at fault
- Rental car reimbursement
- Roadside assistance
Is One-Way Car Insurance Cheaper?
Yes, one-way car insurance is typically cheaper than two-way car insurance, but only because it offers less coverage. The less coverage you have, the more financial risk you assume. As such, it’s unwise to choose one-way car insurance simply because it’s cheaper without first evaluating your circumstances.
Consider the potential costs of repairs and medical expenses, assess your ability to cover these costs out-of-pocket, and think about how an accident could impact your financial stability. Ask yourself questions like, is your vehicle older and less valuable? Would it be feasible for you to pay the cost of repairs or replacement out-of-pocket? If your car is totaled, could you afford to replace it with a new vehicle? How would these unexpected expenses impact your financial stability?
By asking yourself these questions, you’ll gain a clearer understanding of whether the risk associated with one-way car insurance is worth the lower cost.
Is Two-Way Car Insurance Worth It?
The only person who can say if two-way car insurance is worth it or not is you. While the comprehensive coverage that two-way car insurance offers typically comes with a slightly higher premium, it often proves more economical than covering repair bills, damages, injury, or legal expenses out of your own pocket.
Just consider the fact that Groupement des assureurs automobiles found the average cost of repairing a car in 2022 to be between $6,291 and $7,024. On top of this, the average cost of both collision and upset coverage claims jumped 72% between 2012 and 2022, while third-party liability claims rose 97%. As the price of cars and car repairs have only continued to rise since the time of this study, the financial risk of being underinsured has also increased significantly.
Thankfully, two-way car insurance can help mitigate your financial risk and provide peace of mind, which is especially important if your vehicle is valuable or if you live in an area with high theft rates, such as the Greater Toronto Area.
Next Steps: Get Better Car Insurance for Less
While there will naturally be a price difference between one- and two-way car insurance, comprehensive, two-way car insurance might be more affordable than you once thought. In fact, at YouSet, drivers save an average of 29% on car insurance. Want to find out how much it will cost you? With the YouSet platform, it only takes four minutes to get a car insurance quote and find out how much you could potentially be saving every month.