There are few things you can be sure of in life: death, taxes, and if you drive, car insurance. Unfortunately for many drivers in Ontario, the cost of car insurance has become much more expensive.
Auto insurance rates have risen by an average of 12% in the past 18 months, and one city has risen nearly 40%, according to a recent report by Toronto-based EURADOTCA.
In dollars, this means the estimated median auto insurance premium is currently $1,744. This is up from $1,555 in December 2021, the last time the data was examined.
Reasons for this increase include a return to pre-pandemic routines, inflation, ongoing vehicle and parts shortages, longer wait times for repairs, as well as an increase in car thefts and a jump in the number and the severity of the claims.
Where is the most expensive car insurance in Ontario?
Brampton has the highest auto insurance rates in the province at $2,707 per year, an increase of 37%. The reason: Drivers in Brampton are filing claims more frequently and for higher amounts.
"If you were to pull the story of someone in Brampton, you're much more likely to see personal injury claims," Daniel Ivans, an auto insurance expert, notes in the report. "[Insurers] don't care about car repair. They care about accident claims.
An accident claim (compared to an auto repair claim) is the most expensive type of claim. That's because it covers medical bills for non-OHIP treatment, lost wages, rehabilitation, and more. An accident claim may also include a civil lawsuit.
"In a big city, expenses are high and money is everything," Ivans says. "When people have an accident, they think: 'How can I make money out of this? "
The most expensive auto insurance rates in Ontario
The report noted that drivers in the Golden Horseshoe (an urban region located on Lake Ontario that stretches from Niagara in the south to Orillia in the north and Peterborough in the east) pay the highest insurance rates, and that's consistent year after year. Several factors contribute to such high rates, including traffic congestion, longer commutes, and higher-than-average vehicle prices. There is also a higher number of new drivers due to the high concentration of new Canadians in southern Ontario who have to pay higher rates due to their lack of insurance history in Canada.
According to the study, 168 of the 187 cities surveyed have premiums below the provincial average, and 18 of the remaining 19 cities are located in the Golden Horseshoe region. Here are the top ten:
| Ranga | Ciudad | Estimated average premium in 2023 | Estimated average premium in 2021 | Change (%) |
|---|---|---|---|---|
| 1 | Brampton | 2707 $ | 1976 $ | 37% |
| 2 | toronto | 2325 $ | 1953 $ | 19% |
| 3 | Mississauga | 2311 $ | 1971 $ | 17% |
| 4 | hill of richmond | 2188 $ | 2025 $ | 8% |
| 5 | Vaughan | 2158 $ | 2179 $ | -1% |
| 6 | Pickeringa | 1985 $ | 1959 $ | 1% |
| 7 | Marhamama | 1870 $ | 1744 $ | 7% |
| 8 | Oshawa | 1839 $ | 1833 $ | 0% |
| 9 | Hamilton | 1810 $ | 1564 $ | sixteen% |
| 10 | Schomberg, King City, Nobleton | 1801 $ | 1766 $ | 2% |
Ratings based on a 35 year old 2019 Honda Civic 4-Door driver with a clean driving record.
Why do insurance prices go up?
There are several reasons for the increase in insurance prices.
Inflation. As inflation continues to slow, with rates reduced to 4.3% in March, this continues to affect auto insurance premiums as insurers have to adjust their rates to keep up.
Busier roads.There are more drivers on Ontario's roads as workers return to their offices since the pandemic restrictions were lifted. More drivers mean more accidents, which increases the likelihood of insurance payouts.
High car prices.Car prices are currently very high. In the first quarter of 2023, a new car cost $61,000, up from $45,000 in 2021. A used car cost $39,000 less than $26,000. While there are several factors contributing to this upward pressure, two major ones top the list: limited supply of cars and a lack of semiconductor chips needed for safety components like airbags and brakes.
Rate changes.The Ontario Financial Services Regulatory Authority (FSRA) is responsible for ensuring fair and reasonable auto insurance rates. Due to inflation and people driving more, the FSRA has already done that.approved rate increasesto 15%, with an average increase of 6.5%. If you are affected by an increase, expect to pay more at renewal.
Car theft.The frequency of car make and model theft is one of the factors based on which insurers determine the amount of insurance premiums. According to the Insurance Bureau of Canada (IBC), auto theft is on the rise with a vehicle stolen every 48 minutes. Each year, the Equité Association, a national non-profit organization dedicated to combating insurance fraud and crime, publishes a listThe 10 most stolen vehicles in Canada. Number one on the latest 2021 list: Honda CR-V.
Insurance fraud.When another driver intentionally causes an accident to pay compensation or claims that the injuries are much worse than they really are, this is insurance fraud. According to the IBC, this is a significant driver of premium growth, which costs Ontario policyholders more than $1 billion a year, or $236 per insured vehicle.
What determines the auto insurance rate?
To determine auto insurance rates, the insurer will determine your insurance risk by considering a large number of pricing factors, including:
- your driving record.
- Make, model and year of your car.
- your zip code.
- Your daily commute.
- Annual kilometers traveled.
- Your driving license level, i.e. G1, G2 or G.
- your age and gender.
- The level of protection you choose.
Your insurance company considers both the driver and the car when setting insurance rates. For example, two 35-year-old men driving a Honda Civic in the same Toronto neighborhood will not have the same insurance premium if one has a clean driving record and the other has received multiple speeding tickets in the past. .
Is auto insurance required in Ontario?
Car insurance is mandatory throughout Canada and you can afford itserious consequencesif you are caught driving without it, including hefty fines, license suspension, vehicle impoundment, and even jail time. Even if you have insurance, but can't provide itsecurity test(commonly known as a pink card), when stopped by the police, you can be fined $5,000 plus a 20% surcharge for the first offense.
Canada offers public and private auto insurance. Drivers in British Columbia, Saskatchewan, and Manitoba must purchase public or government-funded insurance (although private insurers may provide additional coverage), while drivers in Ontario, Alberta, New Brunswick, Newfoundland, Nova Scotia, and PEI have access to private insurance. . Quebec offers a hybrid of both.
here are the typeslegally required insurancein Ontario:
- Liability insurance.This covers damage to someone else's property, injury to others in an accident, and legal defense costs if you are sued. The mandatory minimum is $200,000, but most insurers recommend coverage amounts of $1 million or $2 million.
- Accident benefits.This covers medical costs, rehabilitation expenses, and financial compensation, including compensation if you are injured in an accident.
- Direct Property Damage (DCPD).With DCPD insurance, your insurance company pays for repairs to your car when you are not at fault for the crash.
- Car insurance without insurance.This insurance protects you (and your family) if you are injured or killed by an uninsured or hit-and-run driver.
Your policy may also cover:
- Collision or volat cover.The insurance covers the costs of repairing damage to the car after a collision with another car or after colliding with another object, for example a crash barrier.
- Comprehensive insurance.The insurance covers theft and damage caused by fire, hail, flood, acts of vandalism, falling objects and the impact of animals (for example, in the event of a deer being run over).
- Specific risks:The insurance covers certain risks listed in the policy, including: fire, robbery or attempted robbery, lightning, hail, rising water, earthquake, gale, explosion, riot or civil disobedience, crash or forced landing of an aircraft or part of a aircraft, and grounding, sinking, fire, derailment or collision of any means of transport in which or on which the automobile is transported by land or water.
- All hazards:This is the most complete protection (and most expensive) because it combines protection against collisions or interference and comprehensive protection. It also covers loss or damage if someone who lives with you or works for you steals your car.
How much insurance do I need?
While it can be tempting to limit coverage to the $200,000 provincial minimum, it leaves you in financial trouble if you're in an accident and a claim is filed against you. According to IBC2022 data on the property and casualty insurance industry in Canada, 281,351 liability claims were filed in 2020, costing a total of $4.5 billion, and 79,173 accident benefit claims, costing more than $2 billion.
The average cost of a claim in 2020 in Canada is as follows:
| Type of insurance | average cost of claims |
|---|---|
| Third Party Liability | 16 090 $ |
| accident benefits | 25 508 $ |
| Collision | 7 983 $ |
| Comprehensive | 4694 $ |
Most insurers will recommend that you get higher liability limits on your liability insurance to protect your family and property in the event of a lawsuit. You can also increase the scope of accident benefits, as well as add other optional ones.collisionI thecomprehensive insurance protection, depending on where you live and how often you drive. And if you rent a car, you may need to have both.
How to lower your insurance rate
The best way to lower your insurance rates is to maintain a clean driving record. Once you start racking up speeding tickets or even if you hit a small fender, you will be assessed as a higher risk person and your rates will go up. And if they catch youDriving while intoxicatedNot only will your rates go up, but you may find it harder to get insurance.
When you buy a car, you probably consider factors like fuel economy, size, comfort, and safety. But another way to lower rates is to drive a car that is cheaper to insure. Insurers use the Canadian Loss Experience Automobile Rating (CLEAR) system rating, built from actual damage data, to assess the likelihood that a claim will be against a particular make and model of car and how much it will cost: number, higher risk and therefore higher insurance costs. The IBC publishes an annual edition"How They Test Cars"using this CLEAR rating to inform consumers of the insurance risk associated with their specific vehicle.
How can I save on car insurance?
Auto insurance may be a must, but rates can vary greatly from one insurer to another. With that said, it's important not to skimp on auto insurance. Instead of lowering range caps, here are some of themWays to save money on car insurance.:
- Trade.The best way to save money is to compare auto insurance quotes from various companies. You can get free quotes online or by working with acar insurance broker. Independent insurance agents can provide quotes from multiple companies to save you time.
- Get the right amount of coverage.You'll want to know how much auto insurance you need, and an insurance agent can help you decide coverage limits. While you don't want to be underinsured, you also don't want to pay for more coverage than necessary.
- Ask about discounts.There are more than a dozen common auto insurance discounts, such as multi-policy discounts, winter tire discounts, and bundle discounts if you buy auto and home insurance, for example, from the same company.
- Choose higher deductibles.They aredeductibleis the amount of money needed to withdraw from your pocket. So if you opt for comprehensive coverage, you can save more each month by opting for a $1,000 deductible instead of $500.
- Be careful who you let drive your car with.Your insurance follows your car, not you, so if you lend your car to a friend and hehave an accidentIt's in your record. And if you let your friend drive the car regularly, but it's not listed on your policy, the insurer may deny the claim and leave you to pay the financial consequences out of pocket.
bottom line
While the rising cost of auto insurance can put a little more strain on your household budget, it's important to have the right insurance in the event of a disaster. The good news is that there are ways to save on your premium without putting your financial future at risk.