Why Is Auto Insurance So Expensive?

Analyzing the Rising Cost of Auto Insurance in Ontario

Insurance brokers across Ontario have been hearing from customers who are unhappy or concerned that their car insurance rates are rising. We understand your concerns. We are drivers, too! To help you understand why Ontario's auto insurance costs are increasing, how the auto insurance industry is regulated, and—most importantly—what you can do to keep your car insurance costs as low as possible, we have prepared this blog with many helpful tips to help keep your car insurance rates as low as possible.

What Should I Know About Ontario's Auto Insurance Industry?

In Ontario, automobile insurance is regulated by the Financial Services Regulatory Authority of Ontario (FSRA), an independent regulatory agency. FSRA replaced the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO) in 2019. On its website, FSRA states that it was created to improve consumer and pension plan beneficiary protections in Ontario.

In Ontario, motorists are required by law to have car insurance. If you do not have auto insurance, the owner of a vehicle, lessees, and drivers without valid auto insurance can be fined from $5,000 to $50,000. If you drive without proper car insurance, your driver's licence may be suspended and your vehicle impounded.

If a driver is convicted of driving without car insurance, the insurance company may charge a higher premium or refuse to sell the driver insurance altogether. Also, if you are injured in an accident while driving or in a vehicle that is not insured, you may not be entitled to receive income replacement and/or non-earner benefits. You also may not be allowed to sue an at-fault driver for compensation if you sustained injuries in the accident. Further, if you are found to be at fault for an accident causing injury or death, you may be responsible for medical costs and other losses. This is serious stuff.

Why Is Car Insurance So Expensive In Ontario?

In 2023, Ontario's average estimated auto insurance premium increased by 12% compared to 2021 rates.

Numerous factors determine the cost of auto insurance in Ontario. Some factors relate to the driver, the vehicle, and where you live. Others are related to the increasing cost of repairs, more drivers on the road, and inflation.

Some of the key factors that impact auto insurance premiums causing rate increases include:

  • More distracted driving mishaps due to the increased use of smartphones and other connected devices.
  • Vehicles are now commonly equipped with advanced technology that requires time-consuming, skilled repairs and, therefore, costs more to fix.
  • Inflation has increased the cost of vehicle repairs from a mechanic.
  • Inflation has also raised the value of vehicles on the road, so they cost more to replace if they are written off in a collision.
  • Weather patterns are becoming more harsh, which means there's a greater possibility of damage from hail storms and flooding.
  • Insurance fraud has always been a factor, and the more insurance companies and regulatory bodies do to combat it, the more criminals advance their techniques to commit fraud.

If you've experienced a rate increase in your car insurance premiums, it may be related to some or all of the above factors. Speak with your broker at Morison Insurance to learn more about your specific insurance coverage and premiums.

Auto Insurance - Morison Insurance - Ontario

How Are Auto Insurance Premiums Calculated?

Insurance companies take into account several factors when determining your premium. Driving experience and the type, make, model and age of your vehicle are among the factors. Other factors include your driving record, the age of the driver, who else will be driving the vehicle, and where you live (rural areas generally have fewer collisions, cities with high-density populations have more collisions and theft, and will result in a higher premium). If you have any claims, convictions, or license suspensions on your record or have previously been cancelled by an insurance company for a reason such as non-payment of premium, this can impact your rates. Another factor is if you use your car for business. This means you will pay more because you drive more in busier areas. Insurance companies are determining the likelihood that your car will be involved in a collision, the possibility of theft, and how expensive it will be to repair or replace. When the risk is lower, the premium is lower.

The cost to pay claims is the most significant determinant of how auto insurance rates are set. Some factors included in claims' costs are the number of awards of injury claims, legal costs, and auto repair costs (parts and labour).

What Are Some Tips To Cut Auto Insurance Costs?

While pondering why car insurance is so expensive in Ontario, you may be interested in ways to reduce those costs. Some tips to cut auto insurance costs include shopping for the best prices and coverages, getting all the discounts you deserve, increasing your deductible, and keeping your driving record clean, and so much more!

1. Shop For The Best Prices And Coverages

Our broker team can do the shopping for you! We will ask you some questions and shop more than two dozen insurance companies for the best car insurance coverage at a competitive price. We will compare coverages and prices at dozens of companies to get you what you need. One call is all it takes to get many quotes, professional advice, and services at Morison Insurance.

2. Get All The Discounts You Deserve

These 'extras' can save you a considerable amount of money. Here are many of the auto insurance discounts we offer:

  • Bundled Auto and Home Coverage with the Same Insurance Company
  • College and University Students Away From Home Discount
  • Accredited Driving Courses Discount
  • Claims-free Discount
  • Homeowner's Discount
  • Higher deductibles Discount
  • Low-Mileage Discount
  • Long-time and Loyalty Discount
  • Multiple Car Discounts
  • Driver's Education Completion Discount
  • Good Credit Record Discount
  • Accident-free Discount
  • Antitheft Devices Discount
  • Student-With-Good-Grades Discount
  • Snow Tires Discount

3. Consider The Insurance Costs Before You Buy A Car

Before you buy a car, consider the cost of insurance to insure it. The vehicle model and your driving history determine the cost of your insurance. A licensed broker will shop dozens of leading insurance companies to help you find the best insurance coverage tailored to you at the right price.

4. Increase Your Deductible

The deductible is the portion of an auto policy that you pay before the insurance company does. A higher deductible can lower your insurance costs. However, this depends on your individual needs. If you increase your deductible, you must pay the insurance company if you have a claim. Speak to an insurance broker who will provide options on the best way to save on your insurance.

5. Keep Your Driving Record Clean

If you have a less-than-desirable driving record, this can negatively impact your car insurance rates. Conversely, a safe driver with a clean driving record and safe driving habits can lower your auto insurance costs. Some companies offer accident and ticket forgiveness, which means if you maintain a clean record of no accidents or tickets for a certain period, you won't see a car insurance rate increase. Safer drivers get rewarded with affordable car insurance rates.

6. If You Have An Older Car, Consider Less Coverage

If you have an older car, it may be cheaper to insure. The value of older cars depreciates over time, making them worthless. Therefore, you may not need collision and/or comprehensive coverage on an older car. This can help you to save on your insurance.

7. Take An Approved Driving Course

Completing driver training or a driver education course will help you save on your insurance. Most insurance companies offer a discount on your premium for new drivers when they have completed an accredited driving course.

8. Drive A Car That Is Less Likely To Be Stolen

Driving a car that is less likely to be stolen will positively impact your rates. A 2018 news article, citing a report by the Insurance Bureau of Canada, reported that auto theft is up 6% across Canada. Ontario's rate was 15%. At the top of the list of most stolen vehicles were Ford F-series pickup trucks and high-end SUVs.

9. Review The Use Of Your Vehicle With Your Broker Each Year At Renewal

If you are now driving your car less than you used to, this will help to drive down your car insurance costs. Moving to another city or neighbourhood can also mean lower insurance rates. Also, if you use your car for work and no longer do so, this can help to lower your insurance costs.

10. Buy Your Insurance From One Company And Lower Your Rates

If you have multiple policies with one insurance company, this will help lower your rates. Bringing your home, car, and/or additional policies together helps you save. It can also make it easier to manage your insurance with aligned renewal dates. This is also known as bundling your insurance.

11. Be Selective About Who Drives Your Car

If you can exclude a non-standard driver from your policy - meaning they don't drive your vehicle – this can help lower your rates. Ask our brokers for more details. We are here to help.

12. How You Pay May Impact Your Premium

You can pay for your auto insurance policy in total or monthly payments. Sometimes, you'll pay less for your insurance policy if you can pay in full versus installments. An insurance broker will help create a plan that works for you.

This content is written by our Morison Insurance team. All information posted is merely for educational and informational purposes. It is not intended as a substitute for professional advice. Should you decide to act upon any information in this article, you do so at your own risk. While the information on this website has been verified to the best of our abilities, we cannot guarantee that there are no mistakes or errors.

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