What happens if my insurance company goes bankrupt?
Everyone insured by a private insurance company in Canada is protected by a special fund administered by the Property & Casualty Insurance Compensation Corporation. It is financed by the general Insurance industry to protect policyholders.
If a property and casualty insurance company (which includes car insurers) becomes insolvent, this special fund ensures that all pending claims are paid, up to a ceiling of $2000,000 or the limit of the policy, whichever is lower. The deductible is either $500 or the usual deductible for the policy, whichever is greater.
You are therefore guaranteed financial protection, even in the unlikely event that your insurance company goes bankrupt.
It is important to realize that insurance companies in Canada have a high degree of stability and operate within stringent government guidelines. These include a requirement to maintain substantial capital and to hold strong financial reserves.