Auto Insurance In Canada: What's The Cost?

Auto insurance in Canada varies across provinces, with some relying on provincially run coverage and others using private insurance. The average annual premium in Alberta is $3151, while in Quebec, the least expensive province, it is $1112. Ontario has the highest auto insurance rates in the country, with an average annual premium of $1544.86 in 2012, which rose to $1655 in 2020. This is due to a variety of factors, including high fraud rates, higher traffic, and a large number of drivers.

Auto insurance in Ontario

Mandatory Coverage

In Ontario, auto insurance is provided by private insurers, and all drivers are required by law to have a minimum level of coverage. The mandatory coverage includes:

• Third-party liability insurance of at least $200,000
• Accident benefits coverage
• Uninsured automobile coverage
• Direct compensation-property damage coverage

Optional Coverage

In addition to the mandatory coverage, drivers in Ontario can also choose from a range of optional coverages, including:

• Collision coverage
• Comprehensive coverage
• Specified perils coverage
• All-perils coverage

Factors Affecting Insurance Rates

Insurance rates in Ontario can vary significantly depending on several factors, including:

• Driving experience and record
• Age and gender
• Type of vehicle
• Geographical location
• Purpose of driving the vehicle

Ways to Save on Auto Insurance

While auto insurance in Ontario can be expensive, there are several ways to save on your premium:

• Shop around for the best rates
• Increase your deductible
• Choose a car with safety features
• Reduce your mileage
• Bundle your home and auto insurance
• Insure multiple vehicles
• Maintain a clean driving record

Average Cost

The average annual cost of car insurance in Ontario varies depending on the source, but it generally falls between $1,282 and $2,214. However, it's important to note that insurance rates can vary significantly depending on individual factors.

Factors influencing insurance premiums

The cost of auto insurance in Canada varies across provinces, with the average annual premium ranging from $1,112 in Quebec to $3,151 in Alberta. There are several factors that influence insurance premiums, and understanding these factors can help drivers manage their insurance costs effectively. Here are the key factors that play a role in determining auto insurance premiums in Canada:

• Driving History and Record: An individual's driving history and record are crucial factors in assessing their insurance risk. Insurance companies typically examine the past three to five years of a person's driving history, including any moving traffic violations, at-fault accidents, or DUI/DWI convictions. A clean driving record can lead to lower premiums, while a history of accidents or violations will result in higher rates.
• Age and Driving Experience: Younger and less experienced drivers often face higher insurance rates due to their higher risk of being involved in car accidents. Statistics show that drivers between 16 and 19 years of age are three times more likely to be in a fatal crash than those over 20. As drivers gain more experience and maintain a clean record, their premiums tend to decrease.
• Type of Vehicle: The type of car one drives also impacts insurance rates. Insurance companies consider the repair costs, theft rates, and comprehensive claims associated with similar models when setting premiums. Newer cars with more advanced technology may be more expensive to insure due to higher replacement part costs and specialized repair requirements.
• Location: Where a person lives and drives can affect their insurance rates. Metropolitan areas tend to have higher insurance rates due to increased risks of theft, vandalism, and accidents. Additionally, factors such as weather conditions, population size, accident frequency, and local regulations can influence insurance premiums.
• Coverage Selections: The amount and type of insurance coverage chosen will significantly impact the cost. While it's essential to have adequate coverage, individuals should avoid over-insuring. Liability insurance is mandatory in most states, and other types of coverage, such as collision, comprehensive, and medical expense coverage, can be added based on individual needs.
• Credit History: In most states, credit history can influence insurance rates. Insurance companies may use credit-based insurance scores to assess an individual's likelihood of filing a claim, with lower credit scores resulting in higher premiums. However, this practice is banned in California, Hawaii, Massachusetts, and Michigan.
• Demographics: Factors such as gender and education level can also play a role in determining insurance rates. In some states, gender is a factor, with male drivers often paying higher premiums due to higher rates of risky driving behaviour. Additionally, some insurance companies offer lower rates to individuals with higher education levels.

Insurance fraud in Ontario

Insurance fraud is a significant issue in Ontario, Canada, and it is one of the main reasons for the high cost of auto insurance in the province. The problem has a substantial financial impact, with insurance companies paying out approximately $1.6 billion due to insurance fraud every year, which is ultimately passed on to drivers in the form of higher premiums. On average, each Ontario driver pays around $165 extra per year to compensate insurance companies for this issue.

Ontario is one of the most populated provinces in Canada, and it has the most drivers in the country. As a result, it experiences a high frequency of insurance claims, lawsuits, and injuries, which contributes to the overall high cost of auto insurance in the province. However, insurance fraud and organised crime also play a significant role in driving up insurance rates.

The high rate of insurance fraud in Ontario has been attributed to various factors. One of the main contributors is the high population density and congested roadways, which lead to a higher number of automobile accidents and insurance claims. Additionally, distracted driving incidents have more than doubled since 2000, with many drivers using their cell phones while driving, leading to more accidents and claims.

The prevalence of insurance fraud in Ontario has a significant financial impact on both insurance companies and drivers. Insurance companies are forced to pay out large sums of money due to fraudulent claims, and they pass these costs on to consumers in the form of higher premiums. As a result, honest drivers bear the burden of insurance fraud, paying higher rates to compensate for the actions of fraudulent perpetrators.

To combat insurance fraud, Ontario has implemented various measures, including stricter regulations and enhanced investigative measures. However, despite these efforts, insurance fraud remains a persistent issue in the province, driving up the cost of auto insurance for all drivers.

Public vs private insurance

The cost of auto insurance in Canada varies across the country, with the average annual premium ranging from $1,112 in Quebec to $3,151 in Alberta. There are both public and private insurance programs across Canada, with some provinces relying on provincially-run coverage and others using private insurance through multiple independent insurance companies.

Public Insurance

In British Columbia, Manitoba, and Saskatchewan, automobile insurance is provided through government-owned corporations. In Quebec, the government administers insurance covering minimum limits for bodily injury, while property damage coverage is provided by private insurers. The benefit of a public system is that the cost to buy the minimum mandatory coverage tends to be lower. However, there is less flexibility to shop around for better rates or seek discounts for good driving records. Public insurance is also better able to absorb marketplace turbulence without passing costs onto consumers. Additionally, drivers are not required to carry proof of insurance as their policies are tied to their licenses or vehicles.

Private Insurance

In Alberta, Ontario, Newfoundland and Labrador, Nova Scotia, New Brunswick, and Prince Edward Island, auto insurance is supplied by private companies. Private insurance systems offer more competition, which drives down prices and allows consumers to shop around for better rates. Private insurers also offer benefits such as first-accident forgiveness and new vehicle replacement coverage. However, motorists with bad driving records or no record at all are likely to pay more to be insured.

Insurance for young drivers

Young drivers in Canada are generally considered to be those under 25 years of age. Insurance companies view young drivers as high-risk, and as a result, insurance rates are higher for this demographic. Young drivers account for only 10% of drivers on the road but are involved in roughly 25% of collisions.

The good news is that there are ways to lower insurance costs for young drivers. One way is to start on a parent's insurance plan, which is a more cost-effective option than taking out a separate policy. Young drivers can also take a driver's training course, which can lead to significant savings on insurance premiums. Maintaining a clean driving record, obeying the rules of the road, and building an insurance history are also important factors in reducing insurance costs.

Another option for young drivers is to consider usage-based insurance, which can provide a discount of up to 10% and allows the insurance company to monitor driving habits such as braking and acceleration. This type of insurance is especially useful for first-time drivers who are likely to have higher insurance costs.

Comparing insurance quotes from multiple providers is also a recommended strategy for young drivers to find the most affordable rates. Insurance rates can vary significantly depending on various factors, including driving experience, driving record, age, gender, vehicle type, and location. By shopping around and comparing rates, young drivers can find the best value for their insurance needs.

While insurance for young drivers in Canada can be expensive, there are ways to mitigate the costs. By taking advantage of the strategies mentioned above, young drivers can find more affordable insurance options and develop good driving habits that will benefit them in the long run.

Frequently asked questions