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Everything You Need to Know About Vehicle Insurance In Ontario (& Why Rates Are The Highest in the Country)
Vehicle insurance in Ontario is not just a preventative measure – it’s a legal requirement. Ontario law requires all motorists to have some kind of auto insurance policy. Fines for uninsured motorists range from $5K to $50K and could result in having your vehicle impounded or a license suspension. If you make the mistake of driving without insurance, you’ll likely be pegged as a high-risk driver by insurance companies and suffer from increased premiums for the rest of your driving career.
Fortunately, it is possible to find affordable vehicle insurance in Ontario if you are well versed in the ins and outs of auto insurance. Below is an overview of what vehicle insurance in Ontario entails, where to get it, how to choose a provider, and how to secure the lowest rate.
What is vehicle insurance?
Vehicle insurance in Ontario – or anywhere else – is a policy that protects you and your vehicle in the case of an accident. With vehicle insurance in Ontario, you are required to report any accident involving injury or property damage within seven days, whether or not you’re at fault.
According to the Financial Services Commission of Ontario (FSCO), your auto insurance policy is required to provide the following coverage:
1. Statutory Accident Benefits
If you are injured in an automobile accident, statutory accident coverage provides coverage, whether you are found at fault or not. This coverage typically includes medical costs, which may include rehabilitation, caregiving, and income replacement.
2. Third-Party Liability
In the case that an automobile accident results in property damage, injury, or death of someone besides yourself, third-party liability coverage protects you. It covers the claims against you in the case of a lawsuit up to the coverage limit you designate. Ontario law requires motorists to be covered by at least $200,000 in third-party liability, but you may choose to increase that limit at an additional cost.
3. Direct Compensation
Unlike statutory accident coverage, direct compensation covers you in the case another person is at fault for injury or damage to your vehicle. Direct compensation coverage also covers the contents within your vehicle and costs associated with loss of use of your automobile. What that means is, even if another driver is at fault, you are repaid by your personal insurance provider.
Direct compensation is only applicable when: the accident occurred in Ontario, another vehicle caused the accident, the vehicle owner is insured by an Ontario licensed provider or obtained coverage through FSCO.
If your accident falls outside of these terms, you’ll hopefully have opted for Collision coverage, which is an optional, but highly recommended benefit – especially in the case where it’s unclear which driver was at fault.
4. Uninsured Automobile
Uninsured automobile coverage is one of the most critical forms of insurance. It protects you against property damage, injury, or death as a result of an uninsured or hit-and-run driver.
Your auto insurance protects you with the coverage you agreed to in your insurance contract, also known as the “Certificate of Automobile Insurance.” You will receive a new document each year with renewal, which will include a list of vehicles insured under your policy, a list of your coverage benefits (required and optional), a breakdown of your rates and charges, and the time frame of the coverage.
How do you purchase vehicle insurance in Ontario?
There are many options when it comes to choosing vehicle insurance in Ontario, but the four most common (and secure) routes include:
- Insurance agents
- Insurance brokers
- Direct writers
- Comparison websites, like MyInsuranceBroker.com
Insurance agents work for one insurance company and can provide you the details of that particular provider. Insurance brokers represent several insurance providers and will help you identify the best fit for your insurance needs. Direct writers are insurance companies that sell directly to the consumer. Websites like ours, however, allow you to harness the power of many brokers at once – letting you easily compare the rates of virtually every insurance company in Canada.
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How do you choose an insurance dealer?
The best way to choose a broker, agent, or writer is to ask around family and friends. If that doesn’t lead you in the direction you were hoping for, you may want to look in the Internet for reviews or advice from other consumers. When looking for the right agent, broker, or direct writer, some key factors to look for include: their licensing (visit the Registered Insurance Brokers of Ontario or FSCO to make sure they’re licensed in the Ontario area), their rates (aim for at least three quotes from different sources, the more numbers you get, the better informed you’ll be), coverage (different companies offer different deductibles and levels of coverage), customer service (online reviews will be a big help in knowing what kind of service you can expect, especially in a trying time such as a car accident).
Before you get in touch with any of these insurance providers, you’ll need to gather some core information about you, your vehicle, and your driving and insurance history. In specific, you’ll need: your basic info (name, phone number, address, birth date, marital status, etc), your vehicle info (year, make model, mileage, VIN), your driving record (number of years licensed, accidents, traffic violations, etc), your insurance history.
Have this info on hand to save time and don’t leave out any details. If you provide misinformation, you may be denied coverage or penalized with increased rates. Please note: it is illegal for insurance providers to request credit information before offering a quote.
Be sure to ask plenty of questions to get the information you need. Some of the most important details you’ll want to ask about include:
- What optional coverage do you offer? What additional coverage do you recommend?
- How can I get in touch with an agent in the case of an accident or a policy update?
- What are the costs for optional benefits?
- What kind of penalization can I expect after an at-fault accident?
- Are you currently offering any special rates for new customers?
How do you keep your insurance rates down?
When choosing a car insurance provider, motorists are generally looking for the best deal. There are several ways to keep your rates down, while securing the kind of coverage that will protect you, your loved ones, and your possessions. Below is a list of the most efficient ways to keep your rates down while providing the coverage you need:
1. Be a cautious driver.
A clean driving record is the best way to keep your rates down, so play it safe while you’re on the road. Drive at the speed limit, respect traffic signage, check your blind spot, look behind you while backing up – essentially, just be a defensive, aware driver at all times.
The accidents and violations you accrue over the years will last on your record, driving your rates way up. Your driving history is the number one factor insurance companies consider when establishing your rate.
2. Be one step ahead of your insurance broker.
Remember: individual insurance brokers are limited to the companies they represent, which at most is five insurance companies. As an individual, you have access to all of the vehicle insurance options in Ontario (which currently is estimated at over thirty). Working with a broker is a great way to get a few quotes, but remember: their options aren’t all the options. Get some info from them and then compare it to the info you collect on your own. The quotes you get elsewhere can help you negotiate with your broker.
3. Don’t put your eggs in one basket.
If you’re looking for a great rate on vehicle insurance in Ontario, don’t go with the first quote you get. Rates on auto insurance in Ontario run the gamut, so it’s important to learn what companies offer what. Each insurance company assesses your risk as a driver using it’s own set of standards, which typically include your geographic location, the kind of car you drive, your driving record, and how many years you’ve spent as a licensed driver. Because different companies use different factors, rates can vary tremendously from provider to provider.
This is also why MyInsuranceBroker.com is so useful: we can help you find quotes from all major insurance providers in Canada, allowing you to secure the best rate from the best provider for you. If you’re looking for a quote right now, you can receive a quote from the top 15 auto insurers in Canada within two minutes.
4. Don’t get too comfortable.
Just because you’ve been with the same insurance provider for years and years, doesn’t mean it’s the best one. If you’ve been paying the same rate for awhile, it may be time to seek out what’s new on the market. You might just find lower costs for more coverage.
While some insurance companies do provide loyalty discounts, there’s a good chance there’s a new company offering an even better deal. If it’s been awhile since you last shopped around, now’s the time to hunt for that better rate.
5. Reconsider that Tesla.
When you put the down payment on that luxury car, know this: your car payments are not the end of your financial worries. Insurance providers factor in a car’s year, make, and model when determining your insurance rate.
As you probably can already guess, newer cars and sporty models play a big role in high costs, especially when they come with theft or safety risks. Likewise, cars that attract more aggressive drivers tend to receive more tickets, and are more expensive to insure.
Before purchasing a car, you can also check in with the Insurance Bureau of Canada to see the theft risks on the car in question. This will give you a better clue of how your rates might increase in regards to the car.
6. Do you really need ALL that coverage?
If you’re driving a car on its last leg, you can probably opt out of comprehensive and collision benefits, which are generally the most expensive factors of your insurance rate. Always make sure to consider your options carefully, however.
7. Bump up your deductible.
In case you don’t already know, your deductible is the amount of money you are responsible for before your insurance covers the rest of the claim. This generally ranges around $1000. In terms of vehicle insurance, the higher your deductible, the lower your rate.
If you don’t get into accidents very often, you may want to consider increasing your deductible, which will then lower your rate. What this means, is if you raise your deductible from $1000 to $2000, your annual rate will go down, but if you get in an accident, you’ll be responsible for paying $2000 before your insurance covers the rest, rather than $1000. Before making this decision, make sure you can handle (mentally and financially) paying the larger deductible if an accident occurs.
8. Ask about accident forgiveness.
Your insurance rate goes up every time you cause an accident. Accident forgiveness costs a bit more upfront but protects you from the big rate spikes associated with at-fault accidents.
Accident forgiveness can save you up to hundreds of dollars when renewing your rate after an at-fault accident. Not all insurance companies offer accident forgiveness coverage, so if this is something you feel you need, shop around for a provider that does. Some companies may even include it in their standard policy.
9. It never hurts to ask for discounts or promotions.
You won’t always be able to snag one, but if you shop around and ask for it, you might just be given a discounted rate or clued into a seasonal promotion. Discounted rates are generally given to drivers who have a good driving record, are ready to commit their insurance needs to one provider, and are willing to install an anti-theft device on their automobile.
10. Knowledge is power… and often a discounted rate!
If you’re new to driving, an accredited training course for new drivers will not only set you up for a cleaner driving record, but it may help you secure a discount with insurance providers across Ontario.
11. Bundle up!
You can save substantially on insurance by bundling your policies. If you already pay insurance on a home or condo, you might as well choose the same provider for car insurance. Not only will this centralize all of your insurance needs, making it easier for you to keep up with them, but it will likely help you see savings of 11% (on average) across your insurance policy.
12. Consider a usage-based insurance program.
There’s a completely free device you can plug into your car to monitor your driving habits – how often, when, and how you accelerate, how you brake, etc. If you opt into a usage-based insurance program (which requires using such a device), you can save up to 10% on your premium. Drivers with clean records even see savings of up to 25%! The good news: the information gathered from this monitoring device can only be used to lower your rate – not increase it!
13. Pay upfront.
Not everyone has the luxury of paying their annual insurance all at once, but if you can afford it, it will save you. Most insurance providers charge extra for month-to-month payments, generally about 1.3% more. If you pay all at once, you can save a considerable amount.
Why is vehicle insurance in Ontario so high?
According to Peter Cheney of The Globe and Mail, “Ontario has the highest auto insurance rates in Canada, with the average annual premium at $1,544.86… 45 per cent more than in Alberta, the second-most costly.”
That’s a huge jump from one province to the next.
“Auto insurance is the wild west of compulsory services. If you want to drive, you have no choice but to buy it – but what you pay varies wildly,” adds Cheney. “A 20-year-old male in Winnipeg with a clean driving record would pay $1,396 driving a 2008 Honda Civic DX two-door coupe for pleasure (not to commute to school or work) and compiling 15,000 km/year. In Calgary, that same driver would pay between $2,973 and $3,789. In Toronto, the bill would range from $4,239 to $9,270 – an increase of 664%.”
So why is vehicle insurance in Ontario so much higher than the rest of Canada?
Not only is Ontario known for a high rate of insurance fraud, but unlike other areas – like Manitoba and Saskatchewan – Ontario does not have any form of public auto insurance. This means that automobile insurance rates are not standardized across drivers. Male drivers in the 16-24 age range face much higher rates in Ontario than drivers of the same age and gender in Winnipeg.
“It’s based purely on statistical analysis. It’s like charging more for house insurance in a high-risk neighbourhood. I think people have accepted this,” says Pete Karageorgos, manager of consumer and industry relations for the Insurance Bureau of Canada. ”In a public auto insurance system, young drivers are subsidized. In Ontario, young drivers pay rates that reflect their actual risk.”
Ontario’s insurance industry is comprised of over 100 private providers. While Karageorgos believes this gives shoppers the advantage of shopping around, The Consumers Association of Canada (CAC) believes that the private industry runs up costs. “There are some things that should be run by private industry,” says CAC president Bruce Cran. “And there are others that should be in the hands of government. Auto insurance is one of them.”
The CAC believes public auto insurance brings down costs by saving on the dividends private companies have to pay to shareholders and the money they spend on advertising. Additionally, having one unified public program allows the government to standardize rates, not only with insurance rates, but with the body shops, towing companies, and medical facilities, that work with insurance providers.
What is Ontario doing to bring down insurance rates?
In 2013, Ontario set out to reduce insurance rates by 15%. According to the Canadian Press, as of 2017, vehicle insurance in Ontario has gone down by 8%. The Financial Services Commission of Ontario continues to seek ways to lower those rates.
One of the leading contributors to the 8% decrease since 2013 was Ontario’s push to reduce insurance fraud in the province. Insurance rates also saw a decline in 2016, when the province mandated a winter tire discount.
According to the new legislation, insurance companies are required to provide a discount to all auto vehicle owners who change their tires seasonally. Drivers are estimated to save 5% on their yearly premiums with this update.
2016 also saw a reduction in coverages pertaining to the Accident Benefits portion of standard policies. Insurance companies were required to inform all of their policy holders of this change. According to the new plan, the combined limit of $86,000 for rehabilitation, medical, and attendant care for mild injuries dropped to $65,000. Injuries defined as "catastrophic" saw a decrease combined limit from $2 million to $1 million.
The new policy kicked in for those newly insured on June 1, 2016 and for those already insured with their yearly renewals. While standard rates have decreased, drivers still have the option of purchasing the higher coverage for a higher annual rate.
Other policies implanted include:
- Insurance companies can no longer increase driver’s premiums because of minor at-fault accidents.
- The comprehensive coverage standard deductible was bumped up from $300 to $500.
- The maximum fee for making monthly payments (as opposed to yearly ones) was decreased from 3% to 1.3%.
Vehicle insurance in Ontario can be an exhaustive subject, but finding the best rate can still be very simple if you know your rights and the right questions to ask – and if you have the right broker on your side.
If you’re looking for a lower rate on your auto insurance, you can receive a quote from the top 15 auto insurers in Canada within 2 minutes via our helpful online quote tool. Remember, the key to receiving the best rate is to check the most quotes: the more you can get, the better chance you have at locking in a low rate.
Auto insurance doesn’t have to be rocket science, but it does require a bit of insider insight and some strategic legwork. So get informed and start asking for quotes!
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