The Compulsory Automobile Insurance Act in Ontario – CAIA

The CAIA (full title: Compulsory Automobile Insurance Act) mandates that all drivers of cars and other motorized vehicles need to have some kind of insurance card that they carry while driving. This card serves as proof that the driver has car insurance. Documents such as motor liability insurance cards or proofs of insurance issued in either Canada or the United States are considered acceptable forms of insurance cards.

Under the CAIA, all owners or lessees of cars who either operate the vehicle themselves or allow others to operate the vehicle must have car insurance. If an owner or lessee refuses to provide proof of insurance, is found without car insurance or is found providing fake car insurance documents, then they may be facing a fine between $5,000 and $25,000 upon their first offence. If they are convicted again, then the subsequent fine will be between $10,000 and $50,000, and they may also lose their driver’s licence for up to a year. There is also the possibility that the courts may have the car impounded for up to three months.

If you are an insurance company that provides policies that do not cover the province of Ontario, you should file a PDU (Protected Defendant Undertaking) with the Financial Services Commission of Ontario. By filing this document, you are making sure that people covered by your company who may be traveling in Ontario will have the minimum amount of insurance required in that province. The PDU also makes sure that if someone insured in another province has an accident in Ontario, they are protected from things such as liability for income loss or earning capacity, expenses related to health care and liability for damages resulting from minor injuries.

The PDU is a document that needs to be filed in addition to a Power of Attorney and Undertaking (PAU) that should be submitted to the Canadian Council of Insurance Regulators (CCIR). Out of province insurance companies should also file with FSCO a Direct Compensation – Property Damage Undertaking. Out of province insurance companies need to realize that if they have not filed a PDU with FSCO or a PAU, policyholders traveling in Ontario will be treated as if they have no insurance at all, which may result in prosecution.