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Why Is Auto Insurance So Expensive?

Why is Auto Insurance So Expensive in Ontario?

Our Morison Insurance brokers have been hearing from customers who are unhappy or concerned that their auto insurance rates are rising. We understand your concerns. We are drivers too. We are eager to help you keep your car insurance rates as low as possible.

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.

 

About Ontario’s Auto Insurance Industry:

In Ontario, automobile insurance is regulated by the Financial Services Commission of Ontario (FSCO), a regulatory agency of the Ministry of Finance. FSCO is accountable to the Minister of Finance. FSCO was established in 1997 under the Financial Services Commission of Ontario Act.  On its website, FSCO states that it regulates the insurance sector; pension plans; loan and trust companies; credit unions; the province’s mortgage brokering sector; co-operative corporations in Ontario; and service providers that invoice car insurers for accident benefits claims set out in the statute.

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.
Further, if you are found driving without valid 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 while you are in a vehicle that is not insured, you may not be entitled to receive income replacement and/or non-earner benefits. You may 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.

 

So… Why Does Auto Insurance Cost So Much?

The Financial Services Commission of Ontario released its fourth quarter report for 2018 and this showed an approved rate increase of 3.35 per cent on average.  The operative word is average. Some drivers many see their rates increase very little – below the average – while others will see increases far above the average.

FSCO reports on approved rate changes four times a year.  Most rate increases are related to the costs of repairs on cars and looking after those who have suffered harm in accidents or other car mishaps.

Two factors identified by FSCO that are impacting auto insurance rates and causing rate increases

  1. More distracted driving mishaps
  2. Higher costs to repair vehicles equipped with technology that costs more to fix.

In November 2018 the Ontario government said it would review the auto insurance system and work to lower auto insurance rates. In its budget the government noted that it would be reviewing some elements of auto insurance and it will look at practices in other jurisdictions. It also said it would consult with insurance companies, the public and others to get their views on how to improve the current situation.

Finance Minister Vic Fedeli has stated that the government will work to cut red tape and modernize the auto insurance sector with electronic communication and issuance of electronic proof-of-insurance cards.

However, the director of consumer and industry relations for the Insurance Bureau of Canada, Peter Karageorgos, has said that addressing fraud in the system, and tackling auto-repair and health-care costs, are issues that need to be looked at.

Here is how Ontario stacks up in terms of auto insurance prices in across Canada.

Data from Insurance Bureau of Canada released in 2018 showed the following:

In 2017 B.C.’s average annual auto premiums were $1,680. Ontario had the second highest auto insurance prices with average annual auto premiums at $1,445. Quebec had the lowest rates at $661 per year in premiums.  Prince Edward Island had $796 on average in 2017.

Here is the list by province:

  1. British Columbia – $1,680
  2. Ontario ­- $1,445
  3. Alberta – $1,251
  4. Newfoundland and Labrador – $1,132
  5. Manitoba -$1,080
  6. Saskatchewan – $936
  7. Nova Scotia – $842
  8. New Brunswick – $819
  9. Prince Edward Island – $796
  10. Quebec – $661

Source: Canadian Underwriter.

 

Here’s How Auto Insurance Premiums Are 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, 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 on your rates.   Another factor is if you use for car for business. This is likely to mean you will pay more because you are probably driving more and perhaps in busier areas. Essentially, insurance companies are determining the likelihood that your car will be involved in a collision, the likelihood 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 largest determinant of how auto insurance rates are set. Some of the factors included in claims’ costs are the amount of awards of injury claims, legal costs, and auto repair costs (parts and labour).

 

Tips To Cut Auto Insurance Costs

1. Shop for the best prices and coverages

Our broker team at Morison Insurance can do the shopping for you! We will ask you some questions and shop more than 2 dozen insurance companies for the best car insurance price. We will compare prices at dozens of companies to get you what you need at a competitive price. One call is all it takes to get many quotes, professional advice and service at Morison Insurance. Get several competitive insurance quotes online, call one of our offices or text us.

Keep in mind that we will always get you the best price we can, however, it’s also vital to get the insurance coverages you need.

2. Get all the discounts you deserve

These ‘extras’ can save you a considerable amount of money. Here are many of the 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 insurance costs to insure it. In short, some cars cost more to insure than other. Contact our broker team at Morison Insurance and we will give you all the details.

4. Increase your Deductible

The deductible is the portion of a policy that you pay before the insurance company does. A higher deductible can lower your insurance costs. Read more information about deductibles.

5. Keep your driving record clean

Making insurance claims, and having driving tickets can negatively impact your car insurance rates. Serious infractions such as driving under the influence (DUIs) can lead to price increases or cancellation of your insurance. Conversely a clean driving record can lower your auto insurance costs. Some companies offer accident and ticket forgiveness which means if you maintain a record of no accidents or tickets for a certain period you won’t see a car insurance rate increase.

6. If you have an older car, consider less coverage

Give some thought to dropping collision and/or comprehensive coverages on older cars. This can help you to save.

7. Take an approved driving course

New drivers will qualify for lower rates when they have completed an accredited driving course.

8. Drive a car that is less likely to be stolen

If you drive a car that is less likely to be stolen this will impact your rates in a positive way. A 2018 news article, citing a report by the Insurance Bureau of Canada, reported that auto theft is up 6 per cent across Canada. Ontario’s rate was 15 per cent. 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, this will help to drive down your car insurance costs. Moving to another city or neighborhood can also mean lower insurance rates. Also, if you used your car for work and no long 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 to lower your rates. Bringing your home and car policies and/or additional policies together helps you to save. It can also make it easier to manage your insurance with aligned renewal dates.

11. Be selective about who drives your car

If you are able to exclude high-risk drivers from your policy – meaning they don’t drive your vehicle – this can help to lower your rates. Ask our brokers for more details. We are here to help.

12. How you pay may impact your premium

In some cases, full pay is better than paying in installments.

 

A Few Words about Cheap Insurance

Our team is all over the effort to get you the insurance you need at the best price possible. We want to be clear though that the cheapest insurance is not always the best.  The right coverage matters.

Be sure that you are getting the coverage you need.  Be cautious. Cheap insurance may not provide the right protection. You may be paying less and getting less. Know what you are insured for.  Remember the adage of ‘You Get What You Pay For’. It generally holds true. Also remember that coverage is protection and if you decide to go with minimal coverage, you get minimal protection.  Our Morison Insurance brokers will be happy to discuss the details of your insurance needs. We want you to save money AND be properly protected.

 

Be Aware: Fast Insurance Isn’t Always The Best Insurance

Some companies appeal to would-be customers by saying they will get your insurance super-fast. Our broker team is definitely committed to getting you insurance quickly, but we are also very committed to getting you the proper insurance protection. If it takes a wee bit longer to do it right, we believe this is time very well spent.  Have you seen the TV commercial where a man has his car hit while it’s parked in an underground garage? Yes, he got his car insurance quickly, says the narrator, but he didn’t get the coverage he needs to be properly protected. Remember, it’s too late to get the proper insurance coverage AFTER an event happens – in this case physical damage to this man’s car.

 

Details Do Matter

We know car insurance can be complicated. There can be lots of things to think about and many unfamiliar terms to understand. Liability. At-Fault Accidents. Comprehensive Coverage. All-Perils Coverage. Vehicle Depreciation Waiver.  These are just a few of the terms that insurance brokers use every day. We don’t expect everyone to be as familiar with them as we are.

Our team of broker professionals is pleased to explain these terms to you and to discuss your coverage needs. Our website has a lot of useful information on auto insurance coverages and answers to frequently asked questions (FAQs).

Contact us for all of your insurance needs. We provide vehicle, home, business, recreational, life insurance and more. If you have it, we can insure it.

 

Get The Right Auto Insurance Price And Coverage

Morison Insurance’s brokers are licensed to provide many kinds of insurance in Ontario, including car insurance. Our brokers are Registered Insurance Brokers. We will get you the insurance you need, provide you with several competitive car insurance quotes AND we will get you all of the insurance discounts you qualify for.

Our brokers represent many different insurance companies from across Canada, and we will find you the auto insurance price to protect you and at a competitive price. We will ‘shop’ for the best price and meet your specific insurance needs.  There are insurance agents and direct sellers in Ontario who sell car insurance, but these organizations do not represent the wide variety of insurance companies that we do as brokers. Typically they represent one – yes, one – company.  When we get you an insurance quote, the Morison Insurance team reaches out to many insurance companies across Canada that compete for your business. This often means a better price for you.

Further with our team you will receive great service to meet all of your insurance needs. We are here whenever you need us – to get answers to your questions, change your insurance policy, report a claim, insure you home, another vehicle, business, cottage, recreational vehicle and much more. We provide outstanding service. Every Morison Insurance customer has a designated broker who looks after your account personally. We are not a call centre. We are a full-service brokerage where the focus of on our customers. We can be reached by phone, email or text. We have 24-hour claims service. We are here for you.

When it comes to insurance, like most things, price is very important. We understand this because we, like you, want to save money whenever possible. We will save you money whenever we can. We will make sure you get any discounts you are entitled to. There are many auto and home insurance discounts.

Aside from price, however, there are other important things to think about when it comes to insurance coverage. What are your deductibles, what are the limits on your coverages and do you have all of the optional coverages you want and need.  We are pleased to discuss all of these with you.

 

Choose Our Award-Winning Brokers

Morison Insurance is pleased to be the recipient of numerous awards, including being named #1 broker in Ontario by the Insurance Brokers Association of Ontario, an association that represents thousands of brokers across the province. We have also won numerous community awards annually in the communities we serve. When you are looking for insurance, choose the best, choose Morison Insurance.

 

More Morison Blogs About Auto Insurance

Each week our broker team at Morison Insurance writes and posts helpful insurance articles. Topics range from How Tickets Affect Your Auto Insurance to Tips to Protect Your Home While On Vacation to Ten Factors That Can Impact Your Home Insurance.

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