What is Public Insurance and How Does it Work?

If you've spent any time on the road, you're fully aware of the importance of car insurance. 

Not only is car insurance required by Canadian law, but it also protects you in your time of need. If you don't have sufficient coverage, you may end up paying for unexpected injury or damage-related expenses by yourself. 

There are numerous types of insurance that drivers in Canada can choose from (or, in some cases, are required to have). One of the lesser-known types of car coverage is known as public insurance. 

If you're not familiar with the ins and outs of public car insurance, be sure to continue reading. Understanding the basics of public car insurance will come in handy if you ever move to a province that requires this type of coverage.

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What is public insurance coverage and how does it work in Canada?

In short, public car insurance is a unique type of coverage offered in certain provinces throughout Canada by provincial governments. Public car insurance is funded by provincial license and registration fees, and occasionally subsidies.

This is quite different from private car insurance, which for-profit companies offer. In some cases, drivers can obtain public and private car insurance.

Both of these coverage options have pros and cons, but we'll dive into that again soon.

What provinces offer public car insurance in Canada?

Public car insurance is available in the following provinces in Canada:

• British Columbia
• Saskatchewan
• Manitoba
• Quebec (the provincial government only offers liability insurance through the Société de l'assurance automobile du Québec)

What are the pros and cons of public car insurance in Canada?

You've likely heard the saying, "there are two sides to every coin" — this saying rings particularly true when it comes to public car insurance in Canada.

There are several positive and negative aspects of public car insurance that Canadian drivers should be aware of.

Pros of public car insurance in Canada

Here are some of the pros of having public car insurance:

Simple and straightforward

There's no denying that finding competitive car insurance quotes can be a tricky and time-consuming task (unless you have a Surex insurance advisor by your side). Many Canadian drivers spend hours searching for and comparing quotes from private providers.

In contrast, public car insurance is a simple, straightforward, one-size-fits-all solution for drivers in Canada. Instead of comparing a lengthy list of quotes, drivers can choose from a handful of different options.

Proof of insurance

Due to the fact that your car insurance is linked to your license and registration, drivers with public car coverage don't need to have their proof of insurance on hand while driving.

Cons of public car insurance in Canada

Here are some of the cons of public car insurance in Canada:

Subsidies

Starting and maintaining a public car insurance system isn't cheap. Generally, implementing public insurance costs a province hundreds of millions of dollars. You may be wondering, "where does the government get the money to do this?" and unfortunately, we don't think you'll like the answer.

Aside from registration fees, most provincial governments will implement subsidies to obtain funding for public car insurance systems. What this means is that the provincial government requires everyday drivers to contribute.

In contrast, private sector insurance providers are funded by investors and put money back into local economies (property payments, employing local residents, general purchases, etc.).

Less flexibility

Unlike privately provided coverage, there aren’t many public car insurance options for drivers to choose from.

For instance, public car insurance requires drivers to pay fixed deductibles. Although this may sound like a minor inconvenience, it can actually force you to pay more for car insurance.

Here's why:

As you likely know, a deductible is the pre-set price that you pay when you make an insurance claim.

If you have privately provided insurance, you have the power to change your deductible. Many drivers choose to increase their deductible, allowing them to lower their car insurance rates by a significant amount (often as much as 30%).

Privately offered car insurance also offers drivers more:

• Plan options
• Discounts
• Insurance add-ons

With this in mind, you can see how drivers with public car insurance are missing out on an opportunity to save a hefty chunk of change.

Unexpected rate changes

Private and public car insurance providers have very different rules when it comes to rate changes. Unlike private companies, public car insurance providers have the power to increase your rates without applying for a rate change.

For instance, in Ontario (a province that doesn't have public options), car insurance companies need to apply to the Financial Services Regulatory Authority of Ontario (FSRA). The FSRA acts as a "gatekeeper" for insurance rates, making it nearly impossible for private companies to make unexpected changes.

On the other hand, public car insurance providers can adjust their rates without any third-party regulation.

Are you tired of overpaying for car insurance?

Speaking of car insurance in Ontario, we know exactly how expensive it can be. If you'd like to save as much as 30% on your annual car insurance expenses, you should start by contacting a Surex insurance advisor.

At Surex, we take pride in our ability to provide you with the most competitive quotes in the private sector. Reach out to one of our team members today to receive ten personalized quotes in ten minutes!

Can you get public and private car insurance in Canada?

This is a fantastic question! However, there are technically three answers:

British Columbia and Manitoba

In British Columbia and Manitoba, drivers are unable to obtain any form of private car insurance.

Saskatchewan

Drivers in Saskatchewan must obtain mandatory public car insurance from the provincial government. Saskatchewan drivers are also permitted to purchase additional extension coverage from third-party providers, which gives them some flexibility. 

Quebec

Out of all the provinces with public car insurance, Quebec is the most lenient.

As mentioned above, drivers in Quebec must get bodily injury liability insurance from SAAQ, but they are free to purchase additional coverage (like property damage) from third-party providers.