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Toronto Auto Insurance Rates
Why are they so high? And how can you lower yours?
Toronto’s high Auto Insurance premium problem
We all love Toronto, it is a sprawling metropolis with a population of 6.13 million people, which represents approximately 44 percent of the population of Ontario (13.8 million), making it the largest city in Canada and the fourth largest in North America (Statistics Canada, 2016).
In fact, Ontario is home to more drivers than any other province in the country and saw 8.2 million total road motor vehicle registrations in 2014 alone, which means approximately 3.6 million of those vehicles were registered in Toronto (Statistics Canada, 2016).
Unfortunately, for the millions of drivers in Toronto and Ontario, Auto Insurance rates have risen considerably, with premiums in Toronto averaging +27 percent higher ($2,017 for a 35-year-old) than the already-high provincial average of $1,538. That works out to an average monthly Auto Insurance cost of approximately $163 in Toronto for a 35-year-old. These costs increase significantly for young and high-risk drivers (Canadian Underwriter, 2016).
It’s no wonder these numbers are causing concerns regarding affordability and value among lower income drivers, especially with recent industry cutbacks to auto coverage for policies (Alexander, 2016).
So what is Auto Insurance? And why do you need it?
Auto insurance coverage you purchase to protect yourself, and others, against financial claims stemming from automobile accidents; ranging from long-term disability coverage to auto repairs/replacements.
You are required to carry Auto Insurance because it is mandatory for all motorists under Ontario law (Financial Services Commission of Ontario, 2016).
If you do not carry Auto Insurance, you may be fined $5,000 to $50,000, your licence may be suspended and your car impounded, you may be considered a high-risk driver by your insurer which will lead to higher premiums (Financial Services Commission of Ontario, 2016).
OK, you need insurance, but what is causing the higher Auto Insurance premiums in Toronto?
According to Canadian Underwriter (2016), Toronto’s high insurance premiums exist because areas with larger populations and with greater driver density (i.e. more cars), naturally leads to more frequent accidents and a higher likelihood of more serious damages in these areas.
While population size and driver density are a leading cause of higher insurance premiums, there are a number of other factors that also contribute. Specifically, strict compulsory minimum liability legislations, lenient accident benefits laws, and insurance fraud are among the other factors contributing to higher Auto Insurance premiums. The table below lists these causes and provides detailed descriptions.
|Population Size||Population Size alone in Toronto is staggering with 6.13 million people. That’s a lot of insurance carriers and a lot of driving obstacles. Whether pedestrians or drivers these numbers represent more risks on the roads which leads to more incidents and insurance claims.|
|Driver Density||Toronto suffers from a higher number of automobile accidents specifically due more drivers and less space for each to move freely. This is directly related to population size mentioned above, but also considers the geographic area Toronto is confined to. Again, the population of Toronto represents approximately 44 percent of the population of Ontario.|
|Strict Compulsory Minimum Liability Legislations||Government-mandated laws require drivers to have the minimum level of coverage of $200,000 in Ontario (Financial Services Commission of Ontario, 2016). You are recommended to purchase additional Third-Party liability coverage up to $500,000, $1 million, or $2 million because the cost is small in most cases (Financial Services Commission of Ontario, 2016). In fact, most brokerages or insurance companies will not undertake you as a risk unless you have a minimum $1 million in liability.|
|Lenient Accident Benefits Laws||Lenient accident benefits laws allow higher payouts to cover automobile accident claims and is prone to exploitation (i.e. insurance fraud) because of the potential of higher-than-expected payouts. However, the 2016 SABS reform has reduced the limits available to consumers.|
|Insurance Fraud||Insurance fraud is the illicit act of intentionally falsifying a claim from an insurance policy with the expectation of receiving income when you are not entitled to payment from certain benefits. For a full definition see What is Insurance Fraud? And How to Combat High Insurance Premiums|
A textbook example of insurance fraud occurred with one of My Insurance Broker’s partners, Aviva, when it was revealed that a paralegal and staff at a Northern Toronto wellness clinic had been captured on hidden camera encouraging Aviva’s undercover patients to commit insurance fraud via fake claims. Fake claims can encompass anything that cannot be proven when making a claim, such as headaches, stress, and pain. According to Aviva Canada, insurance fraud is estimated to cost the province approximately $1.2 billion per year, resulting in inflated Auto Insurance rates in Ontario (Bliss, 2016).
If you are caught committing or attempting to execute insurance fraud: your claim will be denied, your policy may be cancelled, you may be forced to pay higher premiums, you may be denied any potential requests for insurance, and you may be criminally charged and punished up to 14 years in prison (Financial Services Commission of Ontario, 2016).
How does Toronto's car insurance rates stack up against other regions in Ontario?
According to Chittley (2017), Toronto does not in fact have the highest average car insurance premiums, but Brampton does, and is followed closely by Vaughan and Mississauga. This is due in part to the number of years of driving experience and claims size/frequency in these areas among other risk factors (Chittley, 2017). The top ten most expensive Ontario cites according to Chittley (2017) are (average prices):
- Brampton $2,392
- Vaughan $2,018
- Mississauga $1,930
- Toronto $1,886
- Markham $1,886
- Richmond Hill $1,783
- Hamilton $1,683
- Pickering $1,593
- Ajax $1,556
- Bradford $1,484
- Stouffville $1,484
Ontario Average $1,448
But how can you get lower Auto Insurance premiums in Toronto?
Toronto’s insurance premiums are very high in comparison to the provincial average, especially for male drivers under 25 (16-24 years of age) (Cheney, 2014). However, you can start saving money by bundling your Auto Insurance with home, life, commercial insurance plans, maintain a good driving record, and look for discounts and promotions.
Here are additional tips you can follow to help reduce your Auto Insurance premiums:
- Speak to a Broker: If you don't fully understand what your options are as an Auto Insurance consumer, it is in your best interest to speak with a registered Insurance Broker. At My Insurance Broker all of our brokers are licensed and are required by law to provide you the best advice possible and we work with you to ensure you get the best coverage available at a price you want. Hint: 1 (855) 482-5001
- Bundle and Save: Do you own a home or condo, rent an apartment, condo or home? If you do, by bundling your Auto Insurance with your Home, Condo, or Tenants, policy you save!
- Improve your Driving Record: In order to maintain a good driving record, do not engage in unsafe driving habits (unsafe turns, improper use of headlights and taillights, unsafe merges, and speeding).
- Select a Higher Deductible: Doing this will require you to pay more to cover costs, but only when you make a claim, this option lowers your monthly/annual premium, saving you more money long-term.
- Driving Course: Completing a driving course is an asset to help lower premiums because the accreditation shows you as a safer driver.
- Dashboard Camera: It may be an upfront cost to you but it’s a preventative, cost-effective measure against unfair premium increases to show your insurer that you are not at fault during an accident.
- Take Advantage of Discounts: There are countless discounts you may be eligible for. Take advantage of them in order to lower your premiums i.e. home and auto discount, mature driver discount etc.
- Become a Second Driver: If you’re an occasional driver, becoming a second driver instead of the primary driver will reduce your auto premiums.
- Keep Claims to a Minimum: Avoiding making claims for cases of minor vehicular damage is more financially viable since repairs for small damage could increase your premiums
- Be a Good Student: If you are a current secondary or post-secondary student with high grades, you may be eligible for a good student discount from you Auto Insurance provider.