Your Complete Guide To Finding The Cheapest Car Insurance In Ontario

Insurance rates in Ontario are notoriously high. But this doesn't mean you have to sacrifice safety and security to stay on budget.

HOME GUIDES Your Complete Guide To Finding The Cheapest Car Insurance In Ontario

Finding The Cheapest Car Insurance In Ontario

Sean C. Resident Copy Writer/Editor

Car insurance is mandatory in Ontario, and for good reasons. Car insurance gives you the peace of mind that, in the event of an accident, you don't have to worry about shelling out tons of money to cover vehicle damages and medical expenses for you and other motorists or pedestrians involved. An uninsured driver doesn't have that kind of safety net, and when you're in a tight spot financially, an accident could drain the only money you have.

But let's face it. As vital as it is to all motorists, navigating the particulars of finding and applying for car insurance can be tricky – even more so if you’re trying to find a company that offers affordable insurance. Car insurance in Ontario is notoriously expensive, and in order to get the most bang for your buck, you need to understand the ins and outs of auto insurance in the province.

Here, we'll help you do exactly that! And by the time you're done, you'll be ready to find the cheapest car insurance in Ontario.

How Does Car Insurance Work In Ontario?

As mentioned, auto insurance is required by law in Ontario. An uninsured driver or vehicle owner in Ontario can be fined from anywhere between $5,000 to $50,000 and have their license and vehicle taken away temporarily if caught driving without auto insurance. Getting convicted of driving without car insurance in Ontario can also put a dent on your driving record and make it harder for you to find cheap insurance, as companies will flag you as a "high-risk driver".

Car insurance in Ontario works pretty much the same way as business and home insurance here and elsewhere. The insurance process goes something like this:

  1. You find a credible and reliable insurance company.
  2. The insurance company reviews your vehicle, your license and driving record, as well as some of your personal data. The latter can include where you live, your age, and your gender.  In addition, leasing or car financing may also affect the type of insurance you’ll need for your vehicle too. All of this information helps insurance companies estimate the annual car insurance premiums for their customers.
  3. You're then required to pay annual or monthly fees amounting to your premium.
  4. Insurance companies pool all their customers' premiums together to be able to pay for any claims made that year.

Every auto insurance policy in Ontario must include these four types of coverage:

Third-Party Liability Coverage

In the event of an accident resulting in the injury, death, or property damage of another motorist or pedestrian, your insurance company should be able to cover the cost of settling claims. The minimum required amount for third party-liability coverage should be $200,000.

Statutory Accident Benefits Coverage

If you're ever injured in a vehicular accident, your insurance provider should cover the cost of medical care, including rehabilitation and attendant care. Ontario law requires coverage of up to $3,500 per person for minor injuries, and up to $65,000 for non-minor and non-catastrophic injuries for a total of five years. For catastrophic injuries, victims should be covered for up to $1 million in medical treatment and attendant care.

Direct Compensation And Property Damage Coverage

Also known as DC-PD, this kind of coverage ensures you that your insurance company will cover any damage done to your vehicle if another vehicle or motorist is involved. Under DC-PD, even if someone else is at fault, you can collect money directly from your own insurance provider.

According to Ontario law, you can use your DC-PD coverage as long as the accident occurred within Ontario, at least one other vehicle was involved in the incident, and at least one of those vehicles involved is covered by auto insurance.

Uninsured Automobile Coverage

This type of coverage gives you protection in the event that an uninsured driver injures or even kills you or your passengers in an incident. Uninsured automobile coverage also covers damages and injuries caused by hit-and-run drivers.

What Is The Average Cost For Car Insurance In Ontario?

The average cost for Ontario auto insurance is a little over $1,500. This is a pretty steep price to pay in terms of auto insurance rates. Ontario actually has one of the highest insurance rates in Canada, next to British Columbia. But why is it so high?

According to the Huffington Post, Ontario auto insurance rates are so high because of two things: rampant insurance fraud and the high cost of settling claims. When there's a high incidence of fraud in a region, insurance companies are forced to ramp up their insurance rates – leaving customers to deal with the costs. In fact, auto fraud costs Ontario motorists up to $2 billion dollars.

Unfortunately, as a consumer, there isn't much you can do to lower the average car insurance rates. You can be more adamant about reporting fraud – as this is said to have a direct impact in the high cost of insurance. On a personal level, there are some small steps you can take to get a better deal. You can strive for a "cleaner" driving record by practising safe and defensive driving. You can also shop around for better insurance plans.

We've got a comprehensive list of tips on lowering your insurance premiums down below, so continue reading to find out. But first, let's talk about the optional auto insurance benefits, and whether they're worth the additional cost.

Mandatory vs Optional Car Insurance Coverage In Ontario

As previously discussed, there are four mandatory coverages: Third-Party Liability Coverage, Statutory Accident Benefit Coverage, Direct Compensation & Property Damage Coverage, and Uninsured Automobile Coverage. According to Ontario law, insurance companies absolutely must provide coverage for all four.

However, you can also choose to upgrade one or more of the aforementioned coverages by purchasing higher limits or adding optional benefits. Insurers often recommend consumers to increase their Third-Party Liability Coverage from the standard minimum $200,000 up to at least $1 million. The reason for this is that lawsuits can rack up a huge bill, and once you've used up your insurance coverage, you'll have to pay out of pocket. Paying higher annually can protect you from potentially bankrupting yourself in the future. 

In addition, if you have a car loan, you may want to check for the car financing and insurance details with your service provider. The lender may require you to purchase a more comprehensive insurance coverage for your car as part of the auto policy. 

For Statutory Accident Benefits (SABS), you can add the following optional coverages:

  • Income Replacement Benefits. With this type of coverage, you can get up to 70 percent of your weekly income of up to $400 in case an accident renders you unable to show up for work. You can also upgrade your income replacement benefits to up to $1,000 weekly at higher premium rates.
  • Caregiver Benefits. For motorists who are also the primary caregiver for disabled children and/or elderly relatives and an accident renders you unable to fulfil your caregiver duties, you will be eligible for $250 caregiver benefits per week. This stipend allows you to hire another caregiver in your place. In your standard policy, this type of benefit is only given to Ontario residents who are "catastrophically injured" in a car accident.
  • Medical and Rehabilitation Benefits. This is additional coverage for your healthcare expenses when recuperating from an accident. In your standard policy, you will be given up to $65,000 for serious injuries, and up to $1 million if you are deemed catastrophically injured.
  • Expenses for Home Maintenance and Housekeeping. For those who take care of their household maintenance and are unable to continue doing so as a result of an accident, you can be provided with up to $100 per week.
  • Death and Funeral Benefits. In the unfortunate incident that a car accident costs you your life, your eligible spouse will receive $25,000, while eligible dependents will receive $10,000. Your family will also be provided up to $6,000 in funeral expenses. The rates for these benefits can also be increased up to $50,000 for your spouse and $20,000 for your dependents.

While the mandatory SABS is pretty comprehensive, coverage can run out fast if the accident leads to injuries that require constant care and rehabilitation. For example, a collision leading to traumatic brain injuries can result in multiple surgeries, years of rehabilitation therapy, and the need for round-the-clock care. The cost of repairing a vehicle that leads to this kind of injury can also rack up a hefty price.

Aside from all this, you can also opt for the following additional coverages to protect you in case of vehicle damage or theft:

Collisions or Upset Coverage. This covers damages to your vehicle in the case of a collision with another vehicle or an object on the road. Rolling or flipping over is also covered by this.

Specified Perils Coverage. Some of the perils that can be covered by this type of policy include fires, theft, flooding, earthquakes, lightning, hail, windstorm, explosions, riots, falling aircraft as well as any falling parts. In addition, it covers burning, sinking, stranding, or collision during transport of the vehicle.

Comprehensive Coverage. This type of coverage pays for damages incurred from all types of perils, excluding Collisions or Upset. This can include anything from falling objects caused by high winds to vandalism.

All Perils Coverage. This covers everything under Collisions or Upset and Perils, as well as theft or damages done to your vehicle by a member of your household, an employee, or a repairman. For example, if you take your vehicle to an auto repair shop and an employee runs off with it.

Obviously, adding optional coverage on top of the mandatory coverage will result in higher auto insurance rates. But are upgrades and optional benefits worth the money? It all comes down to weighing the monthly or annual costs with the estimated costs for lawsuits, hospitalizations, and repairs in the event of an accident. 

Main Factors That Can Affect Your Car Insurance

Aside from the types of coverages you choose to include in your auto insurance policy, you might be wondering what other factors can affect the cost of your car insurance rates. Here are the factors that can impact your insurance quote:

Your Driving Record & Behavior

Insurance companies will ask you things like "How long have you had your license?" "How long have you been driving in the country?" and "How many major and minor accidents have you been in?" They'll also look at things like speeding tickets, impaired driving offenses, license suspensions and revocations, and other traffic violations.

Essentially, insurance companies need to know if you're a "high-risk driver". Auto insurance companies reserve the right to turn away anyone they deem poses too much risk to their business. It's best to always be on your good behavior when driving – lest you want to have trouble finding a company willing to cover for you.

Here’s a quick tip: aside from your history on record, companies will ask about your current driving behavior, location, and postal code. Where you drive and how often you drive are also factors that affect your insurance. Car insurance companies might hike up their insurance quote if they find that you're spending more time in a postal code where accidents and theft are more likely to take place.

Your Age, Driving Expertise, And License

Typically, car insurance rates are higher for younger and less experienced drivers because they – theoretically – pose bigger risks. Younger drivers are more likely to be reckless, especially when it comes to speeding. Gender also comes into play here – women are often charged a lower insurance rate because they're perceived to be more careful drivers.

But being older doesn't automatically mean getting a lower insurance rate. Seniors are often charged higher car insurance because they're at greater risk of illnesses that can result in accidents, such as Alzheimer's, Parkinson's, and stroke and heart disease.

However, no matter your age, being considered a new or inexperienced driver with a lower level license also affects your insurance policy.

The Type Of Vehicle You Drive

This is good to note before you shop around for a new vehicle. Unfortunately, some cars are costlier to insure. These are generally cars that are more expensive and more difficult to repair. Cars that are more likely to be stolen also lead to a more expensive insurance policy. 

Another thing insurance companies look at is the overall safety of your car. You're more likely to get a discount on your car insurance premium the more safety features your car has. Naturally, cars with manufacturer recalls and safety issues will get you higher rates. Again, this is because auto insurance providers need to protect themselves too. Therefore, make sure you do a car inspection before making any purchases. 

Tips On Lowering Your Car Insurance Premiums

Don't be daunted by the fact that certain factors can and will affect your insurance premium. There are still a myriad of ways you can lower your car insurance. Here are a few practical and cost-effective solutions to get the best premiums out there:

Take A Course In Defensive Driving

Some insurance companies give discounts and rate reductions for motorists with certificates in defensive driving. Auto insurance providers are more confident in drivers who have been taught by professionals since they're less inclined to risky behavior and they've been given a thorough review of the rules of the road.

However, it's important to check with the auto insurance company and their policy around defensive driving to make sure you can get that discount.

Invest In Better Safety And Anti-Theft Measures For Your Car

It's common sense that vehicles with more safety features will be more likely to protect its riders from grave injuries during accidents. Thus, insurance providers are more inclined to offer lower car insurance premiums knowing they probably won't have to shell out too much in the event of an accident. 

Anti-theft devices run on the same principle. If a device can potentially keep you from incurring losses or damages from car thieves, insurance providers are more likely to offer you a discounted rate. Some anti-theft devices you can look into are dashboard cameras (also known as dash cams), CarLock alert systems, steering wheel locks, and GPS trackers. If you’re insuring a used car, make sure you inspect the car to ensure that the safety features are working properly. 

Bundle Your Insurance Policies

If you're looking to get home insurance in the near future, you might want to consider combining the car insurance with your home insurance plan. Some insurance providers offer a bundle for home, business, and car insurance at a discounted rate.

You can also ask if your provider offers multi-vehicle packages if you own more than one type of vehicle. You're more likely to get the best rates if you purchase your insurance in bulk.

Replace Your Tires Come Winter

Some Ontario companies offer "winter tires discounts". These are essential discounts for replacing your regular tires to winter tires once the season comes rolling in. Motorists in Ontario can save up to 5 percent on their annual car insurance premiums just by making this simple change.

Consider The Costs Of Annual And Monthly Rates

If you're able to, one thing you can do to lower your insurance rates is by opting to pay annual rates. Insurance agencies often offer annual car insurance premiums at a lower rate. While it costs you more upfront, it should result in greater ROI in the future.

Simply Ask Your Car Insurance Company About Their Available Discounts

It doesn't hurt to ask! Most insurance companies have their own set of special discounts, from discounts for members of certain auto associations to slashed fees for customers who opt for paperless documentation. Sometimes, even your occupation can get you a discount. All you have to do is inquire.

How To Choose A Car Insurance Company

Aside from the aforementioned tips, one of the best ways to get good rates on your car insurance is by being wise about your company of choice. Here are four things to keep in mind when selecting a car insurance provider.

Work With A Licensed Broker

Before anything, find yourself a licensed broker. With the high incidence of insurance fraud in Ontario, you want to be sure you're working with a professional who abides by the law. If you want to be extra vigilant, visit the Financial Services Commission of Ontario website to look up listed agents and companies. 

Brokers are experts who know all the right ways to get lower insurance on cars. A decent broker will help their clients find a deal that works with their lifestyle, needs, and budget.

How do you pick a decent broker? Find someone you feel comfortable with, who doesn't force you to buy but rather offers advice and thoroughly explains concepts you don't understand. Your broker should be willing and ready to answer any questions you have. They should also be easy to reach in case you have any follow-ups in the future.

Visit Each Auto Insurance Company's Website

You'll find that car insurance providers that can take the time to build a website that's comprehensive, informative, and easy-to-understand are also companies that can communicate their policy and rates effectively. Be mindful of websites that withhold necessary information, as well as websites that require personal information that you wouldn't deem necessary to get a basic insurance quote.

Observe How They Do Customer Service

Insurance claims are long and arduous processes – especially if your insurance providers don't have good customer service.

Think of it this way: You've just gotten into an accident and you're worried about whether your car insurance will cover your damages. You call your company and they put you through an endless string of automated responses. You're tired, hurt, and you just want to know how to move forward. Then, you finally get to talk to a person and they can't even give you the information you need. Even worse, customer service isn't available around-the-clock! Frustrating, isn't it?

If you're paying a huge premium to secure insurance for a car, you should have access to swift and reliable customer service. 

Check Customer Reviews Online

When narrowing down your options for insurance providers in Ontario, you need to go the extra mile by checking how they fare with their customers. Oftentimes, customers will leave reviews on car insurance providers' Facebook pages. Go over the reviews and analyze the negative ones. What are the worst traits of that particular car insurance company? Are you willing to stick it out knowing that?

The Importance Of Comparing Car Insurance Rates In Ontario

Whether you like it or not, insurance for cars is mandatory in Canada. While insurance can save you in times of financial strife, an expensive policy can also put a heavy weight on your monthly finances. This is why it's important to compare car insurance rates in Ontario.

Unfortunately for Ontario residents, Ontario has the second-highest insurance rates in all of Canada. That being said, it's incredibly important to be thorough about narrowing down your options when it comes to car insurance brokers and agencies.

Staying informed about the factors that affect your rates, the mandatory and optional coverage benefits, and the myriad of ways you can reasonably lower your insurance rates can all help you make a better, more practical decision when it comes to your car insurance policy.

The next time you shop for insurance in Ontario, keep this guide in mind – you'll thank us later!