Selling Auto Insurance In Ontario: A Step-By-Step Guide

Auto insurance is a legal requirement for every vehicle registered in Ontario. To sell auto insurance in Ontario, you must be a licensed insurance company, agent, or broker. The Financial Services Regulatory Authority of Ontario (FSRA) regulates insurance in the province, and the Registered Insurance Brokers of Ontario (RIBO) is the self-regulatory body for insurance brokers. When selling auto insurance, it is important to be vigilant and follow the regulations to protect yourself and your customers from fraud.

Understand the legal requirements for selling auto insurance in Ontario

To sell auto insurance in Ontario, you must first obtain a general insurance agent licence from the Financial Services Regulatory Authority of Ontario (FSRA). This licence permits you to sell property and casualty insurance, including auto insurance.

Education Requirement

Before applying for a general licence, you must pass the OTL Agent's Exam offered by the Insurance Institute. The exam covers all aspects of the general insurance business in Ontario. Once you pass the exam, you have up to a year to apply for your licence.

If you have a Chartered Insurance Professional (CIP) designation or have passed the Registered Insurance Brokers of Ontario (RIBO) exam, you are exempt from the education requirement.

Sponsorship

To obtain a general insurance agent licence, you must be sponsored by a licensed insurer. Your sponsoring insurer will manage your application process and confirm that you meet all licensing requirements.

Application Checklist

• Be sponsored by a licensed insurer.
• Pass the OTL Agent's Exam or have a CIP designation/pass the RIBO exam.
• Have an Ontario mailing address that can receive registered mail (not a PO box).
• Have a personal email address for FSRA to contact you.
• Be suitable for a licence.

Application Fee

The fee for a new general licence application is $150, which covers the first two years of your licence. Depending on your arrangement with your sponsoring insurer, they may pay this fee, or you may be responsible for it.

Criminal Background Check

As part of the licensing process, FSRA requires a criminal background check to ensure only suitable individuals sell financial products in Ontario. You can either have your sponsoring insurer complete an independent background check and submit the results to FSRA, or you can complete the check through FSRA's approved vendor, Triton Canada.

Selling Auto Insurance in Ontario

Once you have obtained your general insurance agent licence, you can start selling auto insurance in Ontario. It is important to familiarise yourself with the province's auto insurance laws and requirements.

Ontario has compulsory automobile insurance, meaning every vehicle registered in the province must be insured. When registering or renewing a vehicle, individuals must show proof of insurance coverage. The minimum amount of third-party liability coverage required in Ontario is $200,000.

When selling auto insurance, it is important to use a licensed insurance company, agent, or broker. The FSRA regulates insurance in Ontario and provides a website to check if a company, agent, or broker is licensed.

By understanding and complying with the legal requirements, you can successfully sell auto insurance in Ontario while ensuring your clients have the necessary coverage and protection.

Know how to protect yourself from fraud and scams

To sell auto insurance in Ontario, it's important to know how to protect yourself from fraud and scams. Here are some detailed tips to help you do that:

Be Vigilant and Aware:

Be vigilant and aware of potential fraud and scams. Educate yourself about the different types of insurance fraud and scams that exist. Know the red flags and warning signs to look out for, such as strangers making referrals or offering money, unnecessary sudden movements by other drivers, or convenient witnesses appearing on the scene. Trust your instincts—if something seems off, it might be a scam.

Use Licensed and Reputable Companies:

Always use licensed insurance companies, agents, or brokers. Check the licensing of insurance professionals through the Financial Services Regulatory Authority of Ontario (FSRA) or the Registered Insurance Brokers of Ontario (RIBO). When dealing with repairs, use reputable stores, medical clinics, or services approved by your insurance company. These approved vendors often have agreements with your insurance company and are more likely to be reputable.

Collect and Record Information:

After an auto collision, collect as much information as possible. Take photos of the scene, get contact details, vehicle information, and insurance information from all involved parties, including passengers. Record witness statements if possible. This documentation can help protect you from fraud and support your insurance claim.

Be Wary of Referrals and Settlements:

Be cautious when receiving referrals or suggestions from tow truck operators, body shops, or health-care providers. Contact your insurance company for trusted recommendations instead. Do not accept on-site settlements, especially if they involve cash. Report any suspected scams to the police immediately, regardless of the severity of the accident.

Refuse to Sign Blank Forms:

Never sign blank forms or documents before receiving services or treatment. Always review and understand what you are signing. Pay attention to the details and be involved in the claims process to ensure accuracy and prevent fraud.

Demand Detailed Bills and Records:

Request detailed repair and medical bills for any goods or services related to the collision. Review these bills carefully to ensure there are no inflated charges or fraudulent claims. Keep track of all records, bills, and statements to verify the accuracy of your insurance claim.

Report Fraud and Scams:

If you suspect insurance fraud or scams, report them to the Insurance Bureau of Canada (IBC) or Consumer Protection Ontario. You can also contact the FSRA for information on avoiding, detecting, and reporting auto insurance fraud. Additionally, you can make an anonymous call to the IBC tip line at 1-877-IBC-TIPS (422-8477).

Learn the steps to sell a car privately

Selling a car privately in Ontario involves several steps to ensure a smooth and legal transaction. Here is a step-by-step guide on how to sell a car privately in the province:

Prepare the car: Clean both the interior and exterior of the car and collect all car maintenance records and documents.

Determine the value: Research the market to determine a fair selling price for your car. Websites like AutoTrader, Canadian Black Book, and Canadian Red Book can help.

Create an advertisement: Take clear photos from various angles and write an honest description, including make, model, year, mileage, condition, features, and price. Also, include your contact information.

Safety and emissions inspection: In Ontario, the seller is responsible for providing a Safety Standards Certificate (SSC) and an emissions test certificate to the buyer if required. The safety inspection must be conducted by a repair shop registered with the Ministry of Transportation to ensure your vehicle is safe to operate. It can cost between $60-$150, and the certificate is valid for 36 days assuming no repairs are required.

Negotiate with buyers: Be prepared for negotiations and questions from potential buyers. Ensure you meet potential buyers in a safe and public place for test drives or inspections.

Bill of sale: When you find a buyer, you will need to complete a Bill of Sale. You can find a standard form on the ServiceOntario website. The bill of sale must include the Vehicle Identification Number (VIN), make, year, power source (gas, diesel, electric), body type, colour, model, purchase price (and taxes collected), name, address, and signature of the current owner/dealer, and name and address of the buyer.

Payment: Ensure you securely receive payment, such as a certified check, bank draft, cash, or electronic funds transfer. Verify the payment before signing over the ownership.

Transfer of ownership: Fill out the back of the vehicle ownership document (usually the "seller" section) and provide it to the buyer. Remove the license plates from the car. The buyer must take this documentation and proof of insurance to a ServiceOntario centre within six days to manage the registration and sales tax obligations.

Insurance cancellation: Contact your insurance company to cancel your policy on the sold vehicle.

Submit a notice of sale: Submit a Notice of Sale to the Ontario Ministry of Transportation within six days of selling your vehicle either online or at a ServiceOntario centre.

Report the sale to the CRA (if applicable): If you sell your car at a profit and it's considered a capital gain, you may have to report it to the Canada Revenue Agency (CRA). Consult a tax professional for guidance.

Provide a Used Vehicle Information Package (UVIP): Sellers in Ontario are required to provide a Used Vehicle Information Package to the buyer. This package includes vehicle details (year, make, model, colour, body type, cylinders, and power), vehicle registration history in Ontario, vehicle lien information, retail sales tax information, vehicle condition, a bill of sale section, and more.

It is important to retain certain documents after selling your car privately in Ontario, such as the plate portion of your vehicle ownership papers, copy of the bill of sale, UVP, payment records, insurance cancellation documents, and messages/correspondences between you and the buyer.

Familiarize yourself with the documents needed for selling a used car

To sell a used car in Ontario, you need to be familiar with the documents required to ensure a smooth and legal sale. Here's a detailed list of the essential documents you need to gather and prepare:

Used Vehicle Information Package (UVIP)

The UVIP is a critical document when selling a used car in Ontario. It is a comprehensive package that includes various details about the vehicle. As the seller, you are legally required to provide the UVIP to the buyer under the Highway Traffic Act. The package can be ordered online or purchased in person at a ServiceOntario centre. It contains the following information:

• Vehicle details: year, make, model, colour, body type, cylinders, and power.
• Vehicle registration history in Ontario, including all previous owners and their residence.
• Information about the vehicle attached to the licence plate number.
• Vehicle lien information, including any debts or security claims.
• Retail Sales Tax (RST) information and the average wholesale value of the vehicle.
• Last known status of the vehicle's condition, including any reports of it being wrecked or unfit for registration.
• A bill of sale section to be filled out during the transfer of ownership.

Safety Certificate

When selling a used car privately in Ontario, you are typically required to provide the buyer with a Safety Certificate to transfer ownership. This certificate verifies that your vehicle meets the required safety standards. The safety inspection must be conducted by a repair shop registered with the Ministry of Transportation or a licensed mechanic. The cost of the inspection can range from $60 to $150, and the certificate is valid for 36 days if no repairs are needed. While you can sell a car without a Safety Certificate, a pre-sale inspection can increase the resale value and provide potential buyers with added confidence in the vehicle's condition.

Bill of Sale

The Bill of Sale is a crucial document that outlines the terms of the sale. It must be an original document, and a handwritten bill is acceptable. The seller must provide the buyer with this document at the time of purchase. It should include the following information:

• Vehicle Identification Number (VIN)
• Make, year, and power source (gas, diesel, electric)
• Body type, colour, and model
• Purchase price, including any taxes collected
• Name, address, and signature of the seller
• Name and address of the buyer

Vehicle Portion of the Owner's Permit

During the transfer of ownership, you must fill out the vehicle portion of the owner's permit, usually found on the back. This document will be provided to the buyer, while you, as the seller, will keep the plate portion of the ownership document and your licence plates.

Emissions Test (if applicable)

Emissions tests are no longer required for light-duty passenger vehicles and heavy-duty non-diesel vehicles as of April 1, 2019. However, if you are selling a heavy-duty vehicle, an emissions test may still be necessary.

Insurance Cancellation Documents

After selling your vehicle, contact your insurance company to cancel your policy on the sold vehicle. Keep the insurance cancellation documents for your records.

Messages/Correspondence with the Buyer

It is essential to keep a record of any messages or correspondence exchanged between you and the buyer during the sales process.

By familiarizing yourself with these documents and requirements, you can ensure that you have a smooth and legal transaction when selling your used car in Ontario.

Explore the benefits of selling a car privately vs. to a dealership

There are several benefits to selling a car privately in Ontario. Firstly, you are likely to receive a higher sale price compared to trading it in at a dealership, as you have the opportunity to negotiate a better deal and retain the vehicle's full value. This is especially true if your car is modified, rare, vintage, or rebuilt, as dealerships may struggle to accurately price these vehicles.

Secondly, you are in the driver's seat when it comes to setting the price of your vehicle, as you can determine its value based on its condition, market demand, and other factors. This means you can potentially earn more money from the sale by asking for a higher price.

Thirdly, you have the opportunity to establish a personal connection with the buyer, answer their questions, provide additional information, and build rapport. This can be advantageous in negotiating a deal that works for both parties.

Finally, you can showcase your vehicle in the best light by creating detailed listings with multiple photos and descriptions on online platforms, such as AutoTrader, Facebook Marketplace, and Craigslist. This allows you to market your car to a wide audience and attract serious buyers.

On the other hand, selling to a dealership has its own advantages. Dealerships provide a safe space full of professionals, which can save you from having to deal with tire kickers or hagglers. The transaction is also much simpler, as you bring the car in, have it inspected, negotiate the offer, and sell the car, all in under an hour. Dealerships will also usually handle all the required contractual and legal processes, saving you time and effort. Additionally, if you are part-exchanging as part of an auto loan and new car purchase, you can use the value of your old car against the new one.

In conclusion, both options have their benefits. Selling privately gives you more control over the process and the potential for a higher sale price, while selling to a dealership is more convenient and simpler. The best option for you will depend on your goals and priorities.

Frequently asked questions