What’s in store when it’s time to renew your auto insurance policy.
Ask any driver how much they pay for their Ontario auto insurance and chances are they’ll tell you “too much”. It’s an expense that always seems to inch its way higher. But can you expect more of the same? Probably, if the last couple of years are any indication. That’s how long it’s been since rates decreased, and even then, only slightly.
Two Full Years of Rising Ontario Auto Insurance Rates
In Ontario, every insurance company must have changes to their auto insurance rates approved by the Financial Services Regulatory Authority of Ontario (FSRA) and each quarter, FSRA publishes these rate changes. Last time around, in October 2019, it was reported that 26 insurers representing 81% of the market (based on premium volume) had rate changes approved that amounted to an average 2.6% increase. In the previous quarter the results were much the same, only this time 18 insurers were given the green light to increase rates 1.99% on average.
The story hasn’t changed much over the last several years. You have to go back to Q3 2017 for any hint of a decrease, but really it was more about rates maintaining the status quo. At the time, 15 insurers representing about a third of the market had approved rates decrease on average 0.1%. Not much to get excited about, really.
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A Snapshot of Approved Ontario Car Insurance Rate Changes since 2014
For almost five full years, approved rate changes have mostly increased, a bit here and there each quarter with a few exceptions. On the whole, it adds up over the years.
What’s Driving Ontario Auto Insurance Rates to Rise?
It’s complicated, but basically the financial statements of many insurance companies show that, essentially, they are paying out more to administer auto insurance claims than drivers are paying in premiums. The response to this situation is higher rates, but what exactly is going on? Most say it is due to the following three reasons:
1. Increasing Cost of Repair
Bumpers are no longer simply bumpers and your sideview mirrors are more than just mirrors, which means the cost to repair or replace them is increasing despite the prospect of fewer claims. Sensors and cameras to support car safety technologies are typically located in these areas and, as a result, are prone to damage. Even a minor fender bender can result in tens of thousands of dollars in repairs due to the expensive technology incorporated in new vehicles.
2. Distracted Driving
Despite safety technology in today's new cars, the frequency of collisions is not decreasing as expected and some are blaming driver distraction. Audible or visual alerts are ineffective if a driver is too distracted to heed the warnings in time to minimize the damage; they brake too late to reduce their speed at impact.
3. Auto Insurance Fraud
Then there’s the issue of car insurance fraud. Reports indicate that auto insurance fraud costs Canadians a conservative $2 billion annually. The Insurance Bureau of Canada (IBC) estimates fraud costs Ontario drivers specifically $236 each in premiums.
"Auto insurance fraud is an organized big business, largely unknown to consumers, that siphons resources away from our health care system, ties up our emergency services and courts, and drives up insurance costs," said Dan Service, National Director of Investigative Services at the IBC.
To combat Ontario’s high auto insurance rates, part of the mandate of the province’s relatively new Serious Fraud Office includes investigating and going after those involved in auto insurance fraud. The initiative was officially launched in the summer of 2019.
How to Fight the Hike and Reduce Your Car Insurance Rates
As a driver, there are many things you can do to save money on your auto insurance, despite the prospect of a rate hike.
- Compare quotes—We list this first because it’s the easiest way to save. Compare auto insurance rates from more than 30 of Canada’s most trusted providers in one step using InsuranceHotline.com. Last year, drivers saved an average of $427 off their auto insurance premiums after comparing car insurance quotes with us.
- Go for discounts—Discounts are a great way to lower your auto insurance rate, and every insurer offers them. Ask yours for a list of their discounts as there may be ones you didn’t know existed, or that your provider didn’t know to offer you, that could help you save money. For example, does your provider know you have winter tires or belong to a roadside assistance program? A quick chat with your insurer can help ensure you’re getting all the discounts your eligible to receive.
- Consider Usage-Based Insurance—If you’re open to installing a UBI device in your vehicle you could save up to 25% on your premiums.
With the likelihood of higher insurance rates on the horizon, make sure you compare quotes with InsuranceHotline.com. Avoid those pesky hikes and find out how much you can save when you lock in your auto insurance rate for the year.