Consider whether to purchase public or private car insurance, as shown by the side of a car as it drives beside a lake and mountains

Pros and cons: public vs. private car insurance

Updated on:

March 29, 2018

In Canada, there are two distinct insurance systems: public and private. A public system is run by the government, while a private system is run by for-profit organizations.

Residents of British Columbia, Saskatchewan, and Manitoba have to purchase their mandatory car insurance coverage from public insurers, and generally have the option to buy additional coverage (increasing their limits or lowering their deductibles, for example) from their public insurer or from a private insurer of their choice. In Quebec, only bodily injuries are covered by public insurers, and other coverages must be purchased from private insurance companies.

Wondering how all this affects you? Let’s take a look at the pros and cons of public and private insurance.

The pros and cons of public insurance

A public insurance system is run by the government.

Pros

Easy to understand, one-size-fits-all solutions (like fixed deductibles)
Drivers don’t have to carry around separate proof of insurance, as their insurance is tied to their driver’s licence or vehicle registration

Cons

Governments don’t usually have the funds to start and run insurance systems on their own, so they require subsidies from taxpayers
Can increase rates without having to apply for a rate increase
Limited policy choices, add-ons, and discounts available to customers
Reduced private-sector investment (unlike private insurers, who directly invest in the provinces in which they do business, through things like corporate shares, bonds, and real estate)

The pros and cons of private insurance

A private insurance system is run by for-profit corporations (whether they are privately owned, publicly traded, or mutual companies).

Pros

Competition between different private insurers helps to spark more choice and value for customers
More variety of products and services available (such as first-accident forgiveness, replacement cost coverage, and roadside assistance)
More discounts to help customers save
Benefits to the local community, such as job opportunities and tax dollars

Cons

Customers pay based on factors that affect the cost of claims — so if you’re a high-risk driver or homeowner, for example, you’ll likely pay more than you would under a public insurance system
Customers must do their homework to find the coverage (and price) that’s right for their situation

Getting help with public or private insurance

Whether you have public insurance and want to find out what additional coverages are available to you from private insurers or you live in a province that only has private insurance, contact a licensed broker. A broker can do the homework for you and help you get the right coverage to suit your needs and your budget.