Why is Car Insurance in Ontario So Expensive?

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According to the Insurance Bureau of Canada, Ontario ranks second in the list of average car insurance rates in Canada. British Columbia ranks first ($1,832 annually), followed by Ontario ($1,505 annually).

Irrespective of the rates, car insurance in Ontario is mandatory. But what you actually pay towards car insurance premium varies significantly. Visit Surex to compare car insurance quotes from multiple companies in one place.

So, what is the main reason behind the rate of Car Insurance in Ontario being 55% more than in other provinces of Canada?

Continue reading to learn the answer to the question, “why is car insurance so expensive in Ontario?”.

What is the average cost of car insurance in Ontario?

The average cost of car insurance in Ontario is $1,505 per year. On average, most Ontarians pay between $1500 to $2,000 per year. It is substantially higher compared to the Canadian average of $1,016.

Further, the cost of car insurance can vary greatly depending on the age of the driver, type of vehicle, and your driving record.

Why car insurance in Ontario is so expensive for drivers

Ontario is a densely populated province compared to other provinces of Canada. More vehicles mean high chances of claims. But, this is not the only reason behind high car insurance rates. Here are a few others that contribute equally:

Fraud

As per the Insurance Bureau of Canada, car insurance frauds cost Ontario drivers dearly. They have to pay an additional $236 due to the rise in false and bogus car insurance claims in Ontario. As the rates of claims rise in an area, insurance companies increase car insurance rates to cover the risks.

Contrary to popular belief, insurance companies paid out $1.02 for every $1 of their earnings in 2016. Ontario is not alone in this; every province in Canada feels the same burn. However, the situation in Ontario is worse due to its population.

Extreme weather

Damages caused by extreme weather are on the rise in Canada. Over time, catastrophic storms and harsh climate caused  $2.4 billion in insured damages in 2020. Ontario is no exception. In 2020 alone, the province has faced two catastrophic weather events in January (Snowstorm) and November (Windstorm).

While a single weather event doesn’t impact car insurance rates significantly, it has a cumulative effect on the overall calculation.

More Expensive Vehicles (Cost of Repair)

Over time, the lifestyle has changed significantly. For instance, high-end cars with smart features such as smart displays, rear view cameras, sensors, and built-in GPS are standard nowadays.

Read Also: How to Calculate Your Car Insurance Cost

But people fail to understand the impact of these lifestyle changes on their everyday life, including car insurance rates. Today, it costs insurance companies dearly to repair or replace high-end cars. As a result, they increase the car insurance rates according to the type of vehicle you own.

High accident rates

An increase in the number of vehicles contributes significantly to the increase in accidents on the roads of Ontario. In addition to this, distracted driving is another important contributor. Fiddling with smart gadgets and mobiles while driving is the primary cause of accidents.

In 2021, 81 people lost their precious lives in road accidents. It was a ten-year high. An increase in accidents has a significant impact on the rates of car insurance.

More Inflation

Inflation spares none, and the same is the case with car insurance rates. Inflation in Canada has contributed generously to the soaring car insurance rates in Ontario. Moreover, as per the trends, there is no stopping soon.

Additional factors that affect car insurance in Ontario

Although the auto insurance rate depends on the extent of coverage and the insurer you choose, some other factors also influence your monthly premiums. Here are some noted ones:

Your age

Age plays an important role in deciding your car insurance rates. Young drivers below 25 are likely to pay more than two times more than drivers over 50. The disparity in the rate is due to differences in experience and driving behavior between young drivers and older drivers.

In Ontario, a teenager aged between 16 to 19 may have to pay roughly $8,371 annually, whereas an elder citizen aged between 60 to 69 pays roughly $1,326 annually.

Driving record, experience, and usage

Drivers with no records of traffic violations and parking tickets will likely get a discount on their car insurance premiums. Similarly, an experienced driver pays less in monthly premiums. Insurance companies reward the less risky driver with an additional discount on car insurance rates. But, remember, the opposite is also true.

Another factor that impacts your car insurance rates is how you use your car. For instance, drivers who drive their vehicle only for pleasure tend to get lower rates than drivers who use their cars for daily commute. In simple words, the more the usage, the more you pay for car insurance.

Age, make, and model of your vehicle

The price of your vehicle, model and age significantly impact the car insurance rates. Cars with low safety ratings and a high theft rate are likely to have a negative impact. Similarly, high-end vehicles that are costly to repair or replace fetch higher auto insurance rates.

On the other hand, vehicles with higher safety ratings, low maintenance, and additional safety features can lower your premiums.

Where you live

Car insurance rates are location-oriented. If you live in an area with high theft risks, are prone to extreme weather, or have higher claims histories, you may have to pay higher for your car insurance.

On the flip side, car insurance rates are low in neighborhoods with lower claims histories and are considered low-risk zones.

In addition to the aspects mentioned above, your gender, deductible, and claims history also impact car insurance premiums.

Why car insurance is so expensive in Ontario — Conclusion

Undoubtedly, car insurance in Ontario is one of the most expensive in Canada – thanks to the urban growth, increase in insurance frauds, and extreme weather. Although car insurance is inescapable if you want to drive, efforts should be made to lower the figures.

While good driving impacts car insurance costs, experts recommend shopping around to get the best car insurance in Ontario. Today, you can compare quotes from different insurers in the comfort of your house. So, shop around and save.

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