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How does Ontario auto insurance work?

There are three things you need to know about Ontario car insurance:

1. Ontario law requires that all drivers have auto insurance.

Not only is it a legal requirement for drivers to obtain car insurance on their vehicle, but there are also minimal coverage types and requirements drivers must have, including third-party liability, statutory accident benefit, DC-PD, and uninsured automobile insurance. These requirements are baked into the standard auto insurance policy coverages offered by provincial providers. Drivers can choose to purchase additional coverage, or optional coverages, to provide themselves with more robust protection coverage to support their auto insurance needs.

2. Auto insurance in Ontario operates under a no-fault system.

Despite the name, this does not mean that no one is at fault. Instead, drivers are required to go through their own insurance company when making a claim regardless of who is at fault in an accident.

3. Ontario car insurance also operates under a private insurance model.

Ontario drivers must purchase insurance policies directly from private insurance companies who compete for business like any other private business. You can purchase insurance from insurance brokers, insurance agents and direct writers, aka directly from the insurance providers. Shop the market and compare car insurance quotes today.

Ontario car insurance frequently asked questions (FAQs)

Some of the most common questions Ontario drivers ask us about car insurance

Why is Ontario car insurance so expensive?

There is no doubt about it; Ontario car insurance is expensive. According to the Insurance Bureau of Canada (IBC), auto insurance rates in Ontario are 45 percent higher than in Alberta, and about twice as high as the Maritime provinces. One of the main culprits often blamed for the high rates Ontario drivers pay is the prevalence of insurance fraud that drives up claims costs and increases premiums for all drivers. Insurance fraud includes everything from exaggerating the extent of damages, faking collisions, to overbilling on services performed in the event of a claim. It comes from a wide cross-section of contributors, which makes it a complex issue for the province to deal with. 

Ontario is the capital of auto insurance fraud in Canada. The provincial government has long vowed to change this, but so far efforts have not reached the 15 percent reduction in auto insurance rates promised in previous elections. In December 2017, the province announced plans to make car insurance more affordable by introducing the Fair Auto Insurance plan, which includes reforms to address insurance fraud in Ontario. This includes the launch of the Serious Fraud Office to investigate fraud further. In April 2019, the government launched the Putting Drivers First proposal as part of the provincial budget, which included a number of additional changes to help combat the province's high car insurance rates.

As fraud drives up costs for all drivers, your best defense is to regularly shop around and compare rates to ensure you're still getting the best deal on your auto insurance. 

Which city has the cheapest car insurance in Ontario?

The town or city you live in does impact your insurance rates, with smaller, rural municipalities considered less of an insurance risk than urban centres. For this reason, drivers living in the GTA can expect to pay more than those in the country. However, your postal code is not the only factor to influence your insurance rates. Shop around on and we'll find the cheapest car insurance for your area.

Which cars are the cheapest to insure in Ontario?

Each year, the Insurance Institute for Highway Safety (IIHS) assesses the safety features of hundreds of vehicles. They release a list of top safety picks, which insurers look to when evaluating car insurance rates. Generally, safer cars have cheaper premiums.

Based on internal data, the following cars are the cheapest to insure in Ontario:

1. Subaru Forester
2. Subaru Crosstrek
3. Subaru Outback
4. Tesla Model 3
5. Mazda CX-3
6. Mazda CX-5
7. Subaru Legacy
8. Honda Insight
9. Acrua RDX
10. Mazda CX-9

As expected, they are all IIHS Top Safety Pick+ award winners. Remember though, driving one of these models does not guarantee cheap insurance. To get the best rates, practice defensive driving and maintain a clean driving record.

For more information on the Insurance Institute for Highway Safety and our case study methodology, check out our recent article on the cheapest cars to insure in Ontario.

Who has the best and cheapest auto insurance in Ontario?

There's no one auto insurance company that offers everyone the best rates. Auto insurance premiums for the exact same coverage can vary substantially between insurance companies for a variety of reasons. It all depends on things like the insurer's claims experience and how they rate you as a driver. The only way to know which company offers you the best rate and coverage is to shop around and compare quotes

How much is average car insurance cost per month in Ontario?

The average monthly car insurance cost in Ontario is approximately $120, according to the Insurance Bureau of Canada. However, this can vary greatly depending on your personal driving record and insurance history, the vehicle you drive, where you live, and a number of other factors. Drivers who live in urban areas tend to pay more than drivers who live in rural areas, for example.

Car insurance in Ontario varies significantly, and the best way to determine how much car insurance will cost you is to compare rates. Every driver’s situation is unique, and by comparing quotes customized specifically to you, you'll see not only the range of quotes available to you, but also how much you can save on your car insurance!

Is car insurance mandatory in order to legally drive in Ontario?

Yes, car insurance is mandatory in order to legally drive in Ontario. Vehicles must have insurance or else drivers risk serious fines starting at $5,000 upon a first conviction. Drivers must purchase coverage from a private insurance company. The same is true for drivers in Alberta, New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador

How does no fault insurance work in Ontario? 

Ontario is a no-fault insurance province, and while this might sound like it means no one will be found at fault in the event of a collision, it really means something altogether different. 

What no-fault actually means is if you are injured in an accident or your vehicle is damaged, then you deal with your own insurance company when making a claim. By going through your own insurer, you get the financial help you need right away—whether it’s for injuries you sustained or for fixing your damaged vehicle—instead of waiting for your insurer and the other drivers’ insurers to decide who was to blame for the incident before paying out benefits. 

For more information on this, please review our guide on The Truth About No-Fault Insurance.

What is Ontario's graduated licensing system and how does it affect your car insurance? 

Ontario Driver's Licence System and Your Auto Insurance

In Ontario, drivers must be 16-years-old to obtain a driver's licence. The province operates under a graduated system that has three levels of classification. The first is a G1 licence. This is a written test that drivers must pass. A driver with a G1 class license can operate a vehicle only when driving with a fully-licensed G driver in the passenger seat. A G1 is essentially a learner's permit. Typically people with a G1 license practice driving with someone else's vehicle and would typically be covered under that person's auto insurance policy. To learn more about G1 licence requirements and restrictions click here.

After one year, drivers can take a driving test to obtain their G2 licence. This licence allows drivers to operate a vehicle without accompaniment from a fully-licensed driver. However, there are conditions and restrictions to this licence as well. Depending on the situation, a G2 driver may be added as an occasional driver to an existing policy, or may have their own policy if they own a vehicle. To learn more about what's involved in a G2 licence in Ontario, click here.

Finally, drivers can take further testing to become a fully-licensed G class driver. The graduated licensing process takes about 20 months in total to complete. Whether you have a G2 or a G licence, if you have your own vehicle you must have an auto insurance policy as it is illegal to operate a vehicle in Ontario without valid car insurance. Hot tip: Drivers who take an accredited drivers training program may be eligible for significant savings on their auto insurance. Check the Ministry of Transportation to find out which programs qualify and start saving today!

What are the different types of car insurance in Ontario?

The standard auto insurance policy in Ontario is comprised of four different types of car insurance that are mandatory coverages. Every Ontario auto insurance policy includes the following types of car insurance coverage: 

  • Third-party liability - Covers costs associated with a lawsuit against you in the event that you're responsible for injury or death to, or damage the property of, a third party. 
  • Statutory Accident Benefits - These benefits cover costs such as medical treatments, income replacement and attendant care in the event that you are injured in a car accident. 
  • Direct Compensation-Property Damage - Covers damage to your vehicle or its contents, and for loss of use of your vehicle or its contents, if another person was at fault for the accident. 
  • Uninsured Automobile - Protects you and your family in the event of a hit-and-run or an uninsured motorist injuring you or causing your death. 

There are also several optional coverages that you can add to enhance your auto insurance coverage. 

What is collision coverage in Ontario car insurance?

Collision and comprehensive are the two most common optional coverages drivers choose to add to their auto insurance policies. Both types cover costs associated with fixing your vehicle if damaged. Collision covers damages resulting from an accident, while comprehensive coverage covers damages caused by vandalism, theft, hail and similar named perils. 

What is accident forgiveness coverage in Ontario?

Accident forgiveness is a type of car insurance coverage that allows drivers to have one at-fault accident (their first) without seeing an increase in their car insurance premiums. Typically, if a driver is found to be at-fault in a major accident it’s guaranteed they’ll see their premiums increase since they are now considered higher-risk. However, some insurance companies offer accident forgiveness as a way to acknowledge that sometimes good drivers make mistakes.

You are not automatically covered for accident forgiveness, and there are limitations to this type of coverage:

  • Some companies in Ontario include accident forgiveness as part of their standard policy for eligible drivers, while others may offer it as an optional coverage at an additional charge. Some companies don’t offer it at all.
  • Each company has its own rules and limitations as to the extent of the coverage.
  • There will be eligibility criteria that you must meet in order to obtain accident forgiveness coverage, such as already being accident-free for a defined period of time (usually six years)
  • Accident forgiveness may be honoured by the issuing insurance company, but if you switch to a new provider, that provider will see an at-fault accident on your record and charge you accordingly.
  • Typically protects the primary driver only.
  • Is void if you are convicted of a major driving offence.

In Ontario, insurers cannot increase your premiums for minor at-fault accidents where the following occurred. nobody was hurt there was less than $2,000 in damages to each vehicle, there was no insurance payout and any damages were paid for by the at fault driver. this is limited to one occurrence every three years. Thus, accident forgiveness coverage is meant more for first-time accidents that cause more significant damage.

Be sure you fully understand your accident forgiveness coverage and limitations, as you wouldn’t want any surprises in the event of an accident.

Learn more about accident forgiveness in our article, The Truth About Accident Forgiveness and Other Insurance Features.

What factors will affect my car insurance premium in Ontario? 

When determining your auto insurance rate, insurance companies look at a number of variables, including:

  • Where you live
  • The type of vehicle you drive
  • Your driving record
  • Your insurance history
  • The coverage options you choose to include in your policy
  • Eligible discounts
  • If you’re bundling with other insurance products, such as home insurance
  • Your age and marital status
  • The company’s own insurance claims history 

Why do Ontario car insurance rates change? 

Ontario car insurance rates often change, and it usually boils down to the insurance company’s claims costs. When claims costs go up (or down), typically premiums will follow. There are other factors too, like the introduction of new discounts (e.g. Ontario’s winter tire discount) or when benefit coverages or options change, to name just a few recent examples. 

Ontario auto insurance companies cannot increase, or decrease, their rates on a whim. The Financial Services Commission of Ontario (FSCO), a regulatory agency of the Ministry of Finance, must approve changes to auto insurance rates. Every three months, FSCO releases the rate changes they’ve approved, and while sometimes only a handful of insurers change their rate, other times many do. 

“Consumers are urged to shop around for auto insurance,” says FSCO every quarter in its report. “Ontario has a very competitive marketplace.”

What happens when Ontario auto insurance rates change? 

Any time Ontario auto insurance rates change is an opportunity to save money on your premiums. Rates do not uniformly increase, or decrease, across the board. That’s why it’s important to compare rates regularly. Don’t wait until it’s time to renew to see if you could be saving money. Compare rates, at minimum on renewal, but also when your marital status changes, you move, or buy a new car. 

What is Ontario doing for auto insurance reform in 2019?

As part of the 2019 provincial budget, the Province of Ontario announced a number of changes to work towards auto insurance reform in Ontario. This included:

Putting Drivers First

The blueprint for auto insurance reform in Ontario, the provincial government included among its proposals:

  • Introducing a Driver Care Card to help streamline care and the claims process
  • Improving access to treatment for both physical and mental care
  • Giving drivers more choice in the outcome of insurance claims
  • Reforming the medical assessments process.

Additionally, the government seeks to decrease auto insurance costs and enhance the competitiveness of the market by:

  • Enabling insurance companies to offer more discounts and launch new innovative products, such as pay-as-you-go programs
  • Measurements to combat fraud
  • Improving auto insurance regulation methods in the province
  • Digitizing proof of insurance in Ontario to allow for a more competitive market
  • Ending postal code discrimination so rates are based more on personal driving history than location

Learn more about Ontario auto insurance reform in our article, Ontario Auto Insurance Proposals in Budget to Reduce Costs, Regulations.

What is the process for filing an auto insurance claim in Ontario?

If you are involved in an accident resulting in injury or damage, you must report it to your insurance representative within seven days, no matter who is at fault. Failure to do so could result in your insurance company not honouring your claim. As a best practice, you should report your accident as soon as possible, though final cut off times may vary by provider.

Once you report the accident to your insurance company and file a claim, an insurance claims adjuster will be assigned to your case to determine fault. In the insurance world, someone is always partially or fully at fault. This is so that insurance companies can determine who pays what damages, and that the at-fault driver’s premiums are reflected accordingly. Insurance companies base this decision on the Fault Determination Rules, a legal insurance act governed by the Province of Ontario.

Once fault is determined, payouts will be processed. If you are found to be at fault, your rates may increase upon renewal. If you disagree with the outcome of an insurance investigation you can contact the claims manager or the insurance company ombudsperson to help you resolve the issue. The name of insurance company ombudsperson is usually listed on the company website as well as with the Financial Services Regulatory Authority (FSRA). This is the governing body that oversees auto insurance in Ontario.

Ontario car insurance eligibility and restrictions

Auto insurance is mandatory in Ontario, but that doesn’t mean all vehicles and drivers are eligible for standard market car insurance. Some drivers may have to be covered under a high-risk insurance company. Here’s what you need to be eligible for standard market personal car insurance in Ontario.

Valid Driver’s Licence

  • Must have valid driver’s license
  • All people listed on the policy must also have a valid license
  • Must have a G, G2, G1 or equivalent


  • Must be a Canadian resident
  • Must reside in Ontario

Vehicle Type & Usage

  • Vehicle must be for personal usage only
  • Vehicle must be road safe
  • Vehicle modifications must be reported to insurer
  • Vehicle must not be used for illegal activities such as racing
  • Business vehicles require commercial auto insurance

Good Legal Standing

  • Serious prior convictions, past insurance losses, and claims can affect your eligibility
  • Previous fraud convictions will almost guarantee you won’t be eligible
  • Not disclosing information that can affect your policy can make your insurance null and void

Standard Auto Insurance Coverage in Ontario

Ontario auto insurance policies are standardized and comprised of four mandatory types of car insurance coverage. All four of these types of car insurance coverage are included in a basic car insurance policy.

When comparing quotes, keep in mind that unless you’ve indicated additional coverage, all quotes provided are for standard auto insurance coverage. You always have the option to increase your coverage amounts and purchase additional car insurance coverage as well. When adding things to your policy, it is likely your quote will change to reflect this coverage.

Mandatory Auto Insurance Coverage in Ontario:

Third-Party Liability

Provides coverage in the event someone is injured or killed in an accident, or their property is damaged, resulting in a lawsuit. Liability insurance covers the costs of settling these claims up to your coverage amount.

Mandatory minimum coverage amount: $200,000 minimum, but higher amounts often recommended.

Statutory Accident Benefits

Provides coverage for a number of benefits in the event you are injured in an automobile accident, regardless of who is at fault. These benefits cover medical expenses such as physiotherapy and other expenses not covered by OHIP. All maximum payouts are subject to eligibility as outlined in your car insurance policy. You can purchase additional coverage for most of these Statutory Accident Benefits.

  • Income Replacement Benefits: Basic weekly income replacement of 70% of your gross income up to $400/wk.
  • Medical, Rehabilitation and Attendant Care Benefits: Up to $65,000 for serious injuries, and $1 million for catastrophic injuries.
  • Caregiver Benefits: Up to $250 per week for the first dependent, and $50 per week for each dependent after that.
  • Housekeeping and Home Maintenance Expenses: Maximum payout $100 per week.
  • Death and Funeral Benefits: Up to $25,000 is provided to your spouse, $10,000 for each dependent, and up to $6,000 in funeral costs in the event you are killed in an automobile accident.

Direct Compensation-Property Damage (DC-PD)

Covers damage to your vehicle or loss of use of your vehicle and its contents in the event another person is at fault. There are additional caveats to this type of coverage. The accident must have happened in Ontario and involved at least one other insured vehicle.
If you are seeking additional coverage for your vehicle, you’ll want to purchase collision insurance.

No defined mandatory amount. This type of coverage is for your vehicle so long as it meets eligibility.

Uninsured Automobile

Provides coverage in the event you are injured or killed by an uninsured driver or as the result of a hit-and-run. Can also cover damage to your vehicle if caused by an identified uninsured driver. See Statutory Accident Benefits coverage above.

Optional Auto Insurance Coverage in Ontario:

In addition to increasing coverage amounts for third-party liability insurance and statutory accident benefits, there are also a number of different types of optional insurance coverages you can add to protect your vehicle, the most common being collision and comprehensive car insurance coverage.

  • Collision coverage/Upset Coverage - Covers losses to your vehicle if you’re involved in a collision with another object, including another vehicle, or an object in or on the ground.
  • Comprehensive Coverage - Covers listed perils identified under Specified Perils coverage, as well as damage caused by falling/flying objects, missiles, and vandalism.
  • Specified Perils Coverage - Covers losses from fire, lighting, windstorm, hail, rising water, theft, attempted theft, earthquakes, explosions, and other named perils as identified in your policy.
  • All Perils Coverage - Combines collision and comprehensive coverage and provides additional protections.

Please note that these optional coverages may have their own deductibles.

Tips on getting the cheapest car insurance in Ontario

Saving on car insurance is easier than you think. These 10 tips help ensure you’re getting the cheapest Ontario car insurance rate:

Shop around

Rates often change. In Ontario, changes to car insurance rates are approved every three months. Depending on the quarter, just a few insurers might increase or decrease their rates. Sometimes dozens do!

Increase your deductible

Most car insurance policies default to a $500 deductible, which is the amount you pay in the event of a claim. Increase yours to $1,000 and you're looking at saving five to 10 percent on your car insurance.

Pay your premiums annually

Paying your premiums all at once instead of once a month can avoid those pesky administrative fees that typically accompany monthly payments.

Multi-line discount

Bundle your home insurance and car insurance policies together under one insurance provider to save five to 15 percent.

Insure all vehicles together

More cars under the same policy equals more savings on each policy. If you have more than one set of wheels, save up to 10 to 20 percent by insuring them on the same policy.

Winter tire discount 

In Ontario, if you have (and install) winter tires, you will qualify for a discount of up to five percent.

Review your policy annually

Double check your coverages every year. If you no longer need certain protection, removing it from your policy is one way to reduce costs.


Install a telematics device in your vehicle to save money with good driving habits. Ask your insurer for more information.

Ask about discounts

In Ontario, union members and university alumni are often eligible for insurance discounts. Ask your provider about discounts they offer and see what you may qualify for. 

School’s cool

Are you a young or new driver, or are you adding one to your policy? Encourage them to enroll in an accredited driver's training school. The money you'll save on insurance typically offsets the cost of the training within in the first year.

Recent annual car insurance savings unlocked by real Ontario drivers

Here are some recent examples of savings found by real Ontario drivers from across the province using

Ontario Car Insurance Rate Changes

Each quarter, insurers can apply to have their rates increased or decreased. The Financial Services Regulatory Authority of Ontario (FSRA), formerly known as the Financial Services Commission of Ontario (FSCO), which oversees insurance regulation in the province, approves or denies these requests. Most of the time, insurers request rate increases due to changes in a particular coverage. For example, an insurer experiencing an increased prevalence in payouts resulting from car accidents might apply to have rates increased to help offset the costs of increased claims.

FSRA can also order insurers to apply to adjust their rates, such as in the event of auto reform. According to FSRA, proposed rate changes must be just and reasonable; not excessive; and "not going to impair a company's financial solvency."

This table featuring FSRA's approved quarterly changes shows how often rates change and highlights why regularly comparing car insurance rates is so imperative to saving money on your Ontario auto insurance. These rates can be found at

Quarter Overall Rate Change % Biggest Rate Decrease % Biggest Rate Increase %
Q4 2019 1.56 0 11.05
Q3 2019 2.60 -0.20 15.47
Q2 2019 1.99 -1.20 20.04
Q1 2019 2.7 -0.03 11.4
Q4 2018 3.35 0 34.87
Q3 2018 2.06 0 11.6
Q2 2018 1.1 -0.69 8.15
Q1 2018 2.23 -1.26 9.96
Q4 2017 1.03 -12.67 9.43
Q3 2017 -0.1 -8.9 5.9
Q2 2017 0.76 -1.07 8.97
Q1 2017 1.24 -3.33 7.08
Q4 2016 -0.14 -3.13 n/a
Q3 2016 1.5 -5.37 12.03
Q2 2016 0.33 -6.83 3.7
Q1 2016 -3.07 -25.51 8.99
Q4 2015 -0.15 -8.43 11.86
Q3 2015 -0.5 -4.13 3.79
Q2 2015 0.6 -2.8 15.68
Q1 2015 -0.95 -7.25 2.99
Q4 2014 -0.54 -6.44 0.38
Q3 2014 -0.11 -4.88 5.13
Q2 2014 0.22 -1.26 4.19
Q1 2014 -1.01 -13.6 2.27

Ontario car insurance rates are going up

Auto insurance rates increased an average of 11.4% between Q4 2018 and Q3 2019, according to data from FSRA.

This is based on the average of all approved rate increases submitted to FSRA during this period. Some companies increased their rates by as much as 34.9% in this time, while other approved increases were comparatively lower, increasing by as little as 0.8%, or not at all. Not all insurers requested rate changes, and some even requested decreases during this period, but not many.

Right now, the insurance industry is facing what's known as a "hard market." This is when insurers are paying out a lot more in claims than normal. There are a number of reasons for this, including:

  1. More claims – Insurers are facing an increase in the number of claims they have to pay out, of which distracted driving-related accidents contribute heavily.
  2. Bigger payouts - The costs of the claims have gone up on average as vehicles cost more to repair now.
  3. Fraud – Unfortunately, premiums also continue to be inflated due to the sheer amount of auto insurance fraud that persists in the province.

Since rate increases vary by provider, the easiest way to decrease your premiums (aside from maintaining a clean driving record) is to compare rates.

Average Ontario car insurance premium, 2008 to 2018

The following data is taken from the Insurance Bureau of Canada (IBC), the General Insurance Statistical Agency (GISA) and the Groupement des assureurs automobiles (GAA) provincial comparison report.

Year Average Ontario car insurance premium
2008 $1,314.00
2009 $1,374.00
2010 $1,481.00
2011 $1,532.00
2012 $1,549.00
2013 $1,540.00
2014 $1,486.00
2015 $1,455.00
2016 $1,432.00
2017 $1,445.00
2018 $1,505.00

Get Ontario car insurance quotes to compare for a better rate and coverage 

Compare car insurance quotes and start saving today. Ontario drivers can save millions of dollars on their auto insurance rates. For consumers who saved on IH, the average savings from Jan 2018 to Nov 2018 was $427

The average savings amount represents the difference between the consumers' recorded current premium and the lowest premium generated by