Whenever you get behind the wheel of a car, you are capable of causing damage to other people's property, and injuring or killing yourself, other drivers, passengers and pedestrians. Because most people don’t have the money to pay for the losses they might cause while driving, governments throughout the developed world require drivers to carry a certain amount of insurance ("Liability") to cover any losses (property damage, injury, death) they might cause others to experience.

Some governments, including those of every province and territory in Canada, also require drivers to carry coverage for their own medical expenses and loss of income resulting from driving-related injuries ("Accident Benefits/Bodily Injury or AB/BI").

There is other insurance that you can purchase voluntarily for your car, including coverage for damage to your car ("Collision") and protection against theft, vandalism and other perils ("Comprehensive").