Auto insurance is a legal requirement throughout Canada, but auto insurance in Ontario pays the highest average rate in the country. Choosing an insurance policy is a complicated process, and going in blind means that you run the risk of paying more than you should for your policy.
Understanding how the auto insurance market works in Ontario can help you begin your search to find the best policy for your vehicle’s needs, and save some money along the way.
In Ontario, the government legally requires all drivers to hold an insurance policy. There is a mandatory minimum amount of coverage that you must hold. The minimum policy covers up to $200,000 for damages caused by an accident, known as third-party liability coverage. The province also requires other minimum coverage as a part of your auto insurance policy, including:
Your insurance policy must also include the right for anyone involved in an accident for which you are responsible to sue you in the event of serious injury or death.
However, your auto insurance policy can cover you beyond these minimums. Policies that cover you for larger amounts of damages, or which cover other types of damages, command a higher monthly premium but protecting you from greater financial costs.
Most insurance companies will offer additional add-ons for their policies that can protect you from other costs. The most important of these add-ons is collision coverage for items that are not another vehicle. This includes hitting things such as a trailer, a telephone pole, the car flipping on its own or other obstacles on the road. The minimum insurance guidelines do not cover this type of damage but is an extremely common occurrence.
Other examples of valuable additional coverage exist, including accident forgiveness. Accident forgiveness will prevent your first at-fault accident from altering your premiums.
You can buy dependent care coverage, which provides a fee each week for every dependent that you have if you’re injured and can no longer provide for them. This is on top of the lost income benefit included in the minimums.
Indexation is another form of optional coverage your insurance benefits adjust each year according to the inflation rate.
You may also want to consider comprehensive auto insurance policies. Standard car insurance will provide financial protection in the event of a collision, but if a tree falls on your car, you’re on your own. Comprehensive plans will protect against all sorts of non-driving related damage to your vehicle.
Be sure to check with your insurance company or agent to see what optional coverage they offer, and what is affordable. While additional financial protection is always welcome, adding on a ton of coverage – even if just increasing your coverage from the required minimums – can result in large monthly premiums.
Keep in mind that your personal auto insurance policy does not apply to vehicles you drive for work. Your employer (or you, if you are a business owner) needs to buy an entirely separate commercial auto insurance plan instead.
Not everyone will pay the same monthly premium for their auto insurance. Several factors determine your rates, including your credit score, your vehicle, and where you live. In Ontario, living in a city will translate into higher insurance premiums, though each city has a different average rate.
Some of the things that insurance companies use to determine your payments are within your power to control. Maintaining a driving record free of accidents, police encounters, and other traffic violations can prevent your premiums from rising. Picking a car with more safety features will also help you keep premiums low – as can installing anti-theft and other safety devices into a vehicle you already own.
You can also reduce your monthly auto insurance premiums by increasing your deductible. The deductible is the number of damages that you must pay yourself before your policy kicks in. Increasing the deductible from $250 to $1,000, for example, will reduce your monthly premiums but will mean that you’re responsible for more damages in the event of a collision.
You should also talk to your insurance provider to see if they have any discounts that they offer clients. For example, some providers will reduce your premiums if you take a defensive driving course or you install winter tires on your car.
Some companies also offer discounts if you bundle your auto insurance with other policies, like a home or life insurance, with them. Additionally, you should speak to your agent about paying annually instead of monthly. Some companies will give you a discount if you can afford to pay for your policy for the year ahead.
You should also consider changing your existing auto insurance policy in two main circumstances.
First, if the car you are driving is now older, you may want to consider reducing your optional coverage. Having comprehensive insurance is a great idea for a newer, more valuable car, but a fifteen-year-old minivan likely won’t cost as much to repair or replace. The extra monthly premiums from comprehensive insurance can represent a larger financial burden in this case.
The other instance you should think about changing your auto insurance policy is if it’s been years since you’ve reviewed your rates. While you may not have to make a change, it’s a good idea to look at what competitors are offering every five years or so. This lets you see if you are still getting a good deal, or if you could save money by switching your plan. You should also check with your current company to see if they offer new deals that could save you money without changing providers.
If you experience a collision in Ontario, you file a claim with your insurance company. Ontario is a no-fault province, which means that you do not try to get payment from the other driver’s insurance policy, but from your own.
This means that payment arguments and court cases between insurance companies do not tie up benefits and that your policy will pay money towards vehicle repairs and healthcare costs immediately.
The insurance companies will determine fault on their own. The determination of fault does not alter the payment under your policy or the other driver’s but will determine if your premiums go up in the future.
However, if the damages caused by an accident exceed the maximum of the insurance policy of the other driver, or if the personal injury has permanently altered their quality of life or resulted in death, they can sue you for additional damages (or vice versa).
You can buy an auto insurance policy from three sources in Ontario: brokers, agents, or direct writers.
Insurance brokers sell policies from many different companies, which makes it a little easier for you to shop around and compare similar plans. However, brokers may not have access to every insurance product that a company offers.
Insurance agents only work with a single insurance company. As such, they usually have more options that they can offer you, with the catch that you cannot compare policies very easily without talking to several agents.
Direct writers are the insurance companies themselves, who sell their policies directly to customers without an agent or broker as a middleman. In some cases, buying through a direct writer can reduce the fees on your plan, especially if you buy online.
Finding the best auto insurance policy for your vehicle is a process. It’s a good idea to get in touch with several agents and companies to compare quotes. You need to make sure that you are marrying an affordable monthly premium with an adequate amount of coverage, instead of simply purchasing the most affordable option.
For more information about auto insurance in Ontario, or any other type of insurance product in the province, feel free to get in touch with us. Our staff will be more than happy to help guide you through the process of comparing different insurance policies and finding the policy that best meets your needs.