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In the Age of Self-Driving Cars, Proof of Auto Insurance Finally Goes Paperless

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Financial Institutions and Privacy and Information Protection Bulletin

The Canadian Council of Insurance Regulators ("CCIR"), in its Fall 2016 Communique (PDF), has announced a plan to remove one of the lingering paper requirements in Canada's insurance industry.

Across Canada, motor vehicle owners are required to carry a document, often referred to as a "motor vehicle liability insurance card" or a "financial responsibility card", to prove their vehicle is insured for third-party liability and basic accident benefits coverage. In most Canadian provinces[1] and all of the territories, these documents have taken the familiar form of a wallet-sized pink paper card – the prescribed form for which was adopted by CCIR in the early 1960s. At present, not only must the "pink card" be on paper, but it must also be in its original paper form, meaning that reproductions of the card are not satisfactory to establish proof of automobile insurance coverage.

Despite advancements in e-commerce, insurance regulators in the provinces and territories using the "pink card" have been reluctant to do away with this paper requirement in favour of an electronic alternative.

In the fall of 2015, the Centre for the Study of Insurance Operation and Fasken Martineau issued eSlips Advisory Report: E-Delivery of Motor Vehicle Insurance Cards (the "Advisory Report"), which advocated in favour of an electronic alternative to proof of insurance. In the wake of that report, CCIR launched consultations in spring / summer 2016[2] on the adoption of electronic proof of automobile insurance.

Those consultations led to CCIR's recent announcement: CCIR has approved a plan to introduce an electronic option for proof of automobile insurance for Canada, with implementation targeted for the first half of 2017. While the details of this plan are forthcoming, it is anticipated that the regime will permit insureds to display their "pink card" on a smart phone or similar device, and may even allow them to use a printed copy of an electronic version delivered by email. 

While electronic proof of insurance may be a new phenomenon in Canada, it is already well established in the United States, where the Property Casualty Insurers Association of America reports that 46 U.S. jurisdictions have enacted legislation or regulations to permit some form of electronic proof of automobile insurance.[3] The U.S. experience will likely serve as a resource to CCIR, as there are a number of issues that will need to be addressed in their forthcoming plan. Notably, it will be interesting to see how the plan will propose to deal with issues relating to privacy and liability. These issues, which were raised in the Advisory Report, can be summarized as follows:

  • Privacy: It is common for individuals to store a variety of personal information on their smartphones and similar devices. What safeguards should be put in place around a police officer's ability to access personal information when the officer is in possession of the wireless communication device?
  • Liability: To what extent is a police officer liable if an insured's device is damaged while in the offer's possession when verifying proof of insurance? Furthermore, to what extent is a telecommunications carrier liable in the event that a wireless communication device fails to display the required information to provide proof of insurance?

CCIR's consultation paper Electronic Proof of Automobile Insurance Project (PDF) poses additional questions that will have to be considered before adopting electronic proof of automobile insurance in Canada, including:

  • When traveling to a jurisdiction that does not yet allow for the electronic proof of automobile insurance, what steps must be taken?
  • If the owner on a vehicle gives permission to a third party to use their vehicle, how does electronic proof of insurance work in such cases?
  • While photocopies of proof of insurance are not permissible, will insureds be allowed to print paper copies of proof of insurance cards emailed to them by their insurer?
  • Will electronic proof of insurance apply to all classes of vehicles?
  • What kind of safeguards should be in place to prevent the fraudulent use of electronic proof of insurance?

It is expected that these and other related issues will be addressed by CCIR as part of their forthcoming plan. Clearly, resolving these issues in a uniform manner is in the interests of both insurers, insureds and law enforcement agencies. A patchwork of different regimes across Canada will be of little value to consumers driving across provincial borders, and to insurers operating in more than one jurisdiction.

Overall, CCIR's plan is a welcome development for consumers and insurers alike.  Not only does it align with consumer expectations, as an ever-increasing proportion of consumers use electronic means to interact with insurers, but it will also be of great benefit to insurers, who will be relieved of the burden from having to produce and mail printed cards, and who can further rely on electronic means to streamline their operations.

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[1] The "pink card" is not used in Quebec, British Columbia, Manitoba or Saskatchewan

[2] "Electronic Proof of Automobile Insurance Project (PDF)", May 2016

[3] "Hawaii Governor Signs Bill Allowing Smartphones to Display Proof of Insurance", June 27, 2016


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