Ontario continues to be the second most expensive city in terms of car insurance rates. On average, Ontarians pay around $1,505 for a car insurance policy. However, this estimate can vary significantly depending on the type of car and the car owner’s profile.
Despite skyrocketing prices, every car owner must buy a car insurance policy in Ontario. This leads to our main question “why is car insurance so expensive in Ontario?”. Several factors drive the cost of car insurance in Ontario. We have discussed a few of them in this article.
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What is the typical cost of car insurance in Ontario?
The typical cost of auto insurance in Ontario is $1,505 per year; this is significantly higher than the national average of $1,016. However, the cost typically varies depending on the driver’s age, type of vehicle, and driving record. On average, after considering different aspects like the type of vehicle you wish to insure, the area where you live, or your credit history, the cost can range from $1,500 – $2,000 per year.
Why car insurance is so expensive in Ontario — An in-depth guide
The continuous rise in urban settlement has put a significant burden on the roads of Ontario. More cars mean more chances of accidents, hence, more claims. But there are other reasons behind high car insurance rates. Here are a few others that contribute equally:
Severe weather
The Insurance Bureau of Canada reported $1.9 billion in insured damages in 2018 due to severe weather. Further, the number increased to $2.4 billion in insured damages in 2020.
Like other provinces, Ontario often faces the burn of extreme weather. Snowstorms, windstorms, and hails pose a severe risk to the health of cars and road safety. Therefore, insurers accordingly adjust the premiums to cover these risks.
Fraud
The increase in car insurance fraud in the province of Ontario is one of the main reasons behind the lofty car insurance rates. Although car insurance fraud is common in other provinces, too, the dense population adds more woes to Ontario’s driver story.
On average, many insurers paid out $1.02 for every $1 of their earnings in 2016. As a result, insurance companies hiked the rate of car insurance in the area to compensate for their losses and mitigate the risks.
High accident rates
Distracted driving on the busy roads of Ontario is the leading cause of high accident rates in this province. Also, as mentioned, more cars on the road mean more chances of accidents.
Insurers assess the risk involved by looking at a particular area’s crime and accident rates. If they find significant risk factors, they increase the premium accordingly.
More expensive vehicles (cost of repair)
Modern cars are equipped with the latest technology and costly aesthetics. Today, every car has features like rearview cameras, smart displays, sensors, and built-in GPS. The higher the cost of a vehicle, the higher the price to repair or replace it.
As a result, insurance companies increase the insurance costs of these expensive, high-end cars.
More inflation
It is a no-brainer that over time the cost of every item increases. Car insurance is not an exception. With inflation, the cost of car repair, spares, and even labour charges increase. So, to cover these expenses and beat inflation, insurers hike the cost of car insurance.
Additional factors that affect auto insurance in Ontario
While auto insurance rates depend on the chosen insurer and the extent of coverage, several other add-on factors affect monthly premiums too. Here are some additional things you should consider if you’re still asking yourself the question, “why is car insurance so expensive in Canada?”.
Age of the individual
Your age plays a crucial role in deciding car insurance rates. Compared to drivers aged above 50, young drivers below 25 are likely to pay two times more. For instance, in Ontario, a teenager aged 16-19 requires to pay around $8,371 annually, whereas an elder citizen aged 60-69 requires to pay around $1,326 annually. The disparity in rates is due to the differences in driving behaviour and driving experiences among young and old drivers.
Driving experience, usage, and record
An insurance company rewards a less risky driver with additional discounts, whereas the opposite is also true. For instance, a driver with no record of traffic violations or parking tickets may get an additional discount on the premium. Additionally, a seasoned driver is likely to pay a less monthly premium than an inexperienced driver.
The other additional factor determining your insurance rates is usage. The more you use your car, the more you are required to pay for insurance. For instance, an individual who drives occasionally for pleasure pays less than those who use their cars for daily commuting.
Make, model, and age of the car
Other factors impacting your car insurance rates are your car’s make, model, age, and price. For instance, a car with higher safety ratings, low maintenance, and add-on safety features fetches low premiums compared to one with less impressive safety ratings and a high theft rate. Even a costly, costly, expensive car to repair and replace fetches high insurance rates.
Where you live
Last but not least is the location which decides your car insurance rates. For instance, a location with higher theft risks, extreme weather conditions, and higher claims histories lead to higher car insurance rates.
A location with lower claims histories is considered a low-risk location that fetches low rates. Along with the factors mentioned above, gender, deductible, and claims history also play a significant role in deciding your car insurance premiums.
Why exactly is car insurance so expensive in the province of Ontario? — Conclusion
Now that we know the answer to the question, “why is car insurance so expensive in Ontario?”, it is time to do our part to lower the figures. A good driving record, up-to-date insurance, good credit history, and no-claim history can help you get an attractive discount on car insurance.
Further, you can visit a car insurance brokerage to compare car insurance quotes from more than 10 insurers in one place.
Also Read: The Ultimate Guide For Capital One Rewards.