In NU, what should I know about insurance requirements for car loans?

For a car loan in Nunavut (NU), lenders universally require two main types of insurance. Firstly, basic third-party liability insurance is legally mandatory across Canada, including NU, to operate any vehicle, protecting against damages or injuries you might cause to others. Secondly, because the financed vehicle serves as collateral for the loan, lenders will insist on comprehensive and collision coverage. This protects their asset against physical damage from accidents, theft, vandalism, or other perils like fire, ensuring that if the car is damaged or a total loss, the outstanding loan balance can be covered. In NU, the insurance market is primarily private, and while the Motor Vehicles Act sets minimum liability, the cost of comprehensive and collision can be higher due to the remote location, limited repair facilities, and increased transportation costs for parts, a trend that is expected to continue into 2025 with general rising insurance premiums across Canada. Why this matters to you, the consumer, is critical: without these coverages, your loan will not be approved or funded. Furthermore, maintaining adequate insurance protects you from significant financial burden should your vehicle be damaged or stolen, potentially leaving you with a loan to pay on a car you can no longer drive. Consider discussing optional gap insurance with your provider, which can cover the difference between your vehicle's depreciated value and your outstanding loan balance in case of a total loss.