You can be sure of a few things in life: Death, taxes and, if you drive, car insurance. Unfortunately for many drivers in Ontario, the cost of car insurance has become a whole lot more expensive.
Car insurance rates have jumped an average of 12% in the last 18 months, and in one city have risen almost 40%, according to a recent report by Toronto-based RATESDOTCA.
In dollars, that means the average estimated car insurance premium is now $1,744. This is up from $1,555 in December 2021, the last time the data was surveyed.
Reasons for the surge include the return of pre-pandemic routines, inflation, ongoing vehicle and parts shortages, longer wait times for repairs, as well as an increase in car theft and a jump in the number and severity of claims filed.
Where Is the Most Expensive Car Insurance in Ontario?
Brampton has the highest car insurance rates in the province at a whopping $2,707 per year, up 37%. The reason: Drivers in Brampton file claims more frequently and also for higher amounts.
“If I was to pull someone’s history in Brampton, I’m far more likely to see injury claims,” notes RATESDOTCA insurance expert Daniel Ivans in the report. “[Insurers] are not worried about the car repairs. They’re worried about accident claims.”
A payout for an accident claim (compared to a claim for car repairs) is the most expensive type of claim. This is because it includes medical bills for treatment not covered by OHIP, lost wages, rehabilitation and more. An accident claim may also include a civil suit.
“In the big city, expenses are high and money is the utmost,” notes Ivans. “When people find themselves in an accident, they’re thinking, ‘How do I get money out of this?’”
Most Expensive Car Insurance Rates in Ontario
The report notes that drivers in the Golden Horseshoe (the urban region that hugs Lake Ontario, stretching from Niagara in the south to Orillia in the north and Peterborough in the east) pay the highest insurance rates—and this is consistent year-over-year. Several factors contribute to these high rates including congestion, longer daily commutes and higher than average vehicle prices. There’s also a greater number of new drivers due to a high concentration of new Canadians in southern Ontario who must pay higher rates due to a lack of insurance history in Canada.
According to the survey, 168 out of 187 cities surveyed have premiums below the provincial average and 18 of the remaining 19 cities are located in the Golden Horseshoe. Here’s the top 10 ranking:
| Rank | City | Average 2023 estimated premium | Average 2021 estimated premium | Change (%) |
|---|---|---|---|---|
| 1 | Brampton | $2,707 | $1,976 | 37% |
| 2 | Toronto | $2,325 | $1,953 | 19% |
| 3 | Mississauga | $2,311 | $1,971 | 17% |
| 4 | Richmond Hill | $2,188 | $2,025 | 8% |
| 5 | Vaughan | $2,158 | $2,179 | -1% |
| 6 | Pickering | $1,985 | $1,959 | 1% |
| 7 | Markham | $1,870 | $1,744 | 7% |
| 8 | Oshawa | $1,839 | $1,833 | 0% |
| 9 | Hamilton | $1,810 | $1,564 | 16% |
| 10 | Schomberg, King City, Nobleton | $1,801 | $1,766 | 2% |
Rate estimates based on a 35-year-old driver of a 2019 four-door Honda Civic with a clean driving record.
Why Are Insurance Rates Going Up?
There are a number of reasons for the rise in insurance rates.
Inflation. While inflation continues to slow, with rates edging down to 4.3% in March, it still impacts your car insurance premium as insurers need to adjust their rates to keep up.
Busier roads. There are more drivers on Ontario roads as workers return to the office since the lifting of pandemic restrictions. More drivers mean more accidents, making payouts more likely for insurers.
High car prices. Car prices are currently very high. In the first quarter of 2023, a new car cost $61,000, up from $45,000 in 2021. A used vehicle cost $39,000 up from $26,000. While there are several factors for this upward pressure, two main ones top the list: A tight supply of cars and a shortage of semiconductor chips, needed for safety features such as airbags and brakes.
Rate changes. The Financial Services Regulatory Authority of Ontario (FSRA) is responsible for ensuring that car insurance rates are fair and reasonable. Due to inflation and people driving more, the FSRA has already approved rate increases of up to 15%, with the average uptick sitting at 6.5%. If you’re affected by an increase, expect to pay more at renewal time.
Car theft. How often your car’s make and model is stolen is one of the factors insurers use to set your insurance premiums. According to the Insurance Bureau of Canada (IBC), car theft is on the rise with a vehicle stolen every 48 minutes. Every year, Équité Association, a national anti-insurance fraud and crime not-for-profit, publishes a list of Canada’s 10 Most Stolen Vehicles. Number one on the most recent 2021 list: The Honda CR-V.
Insurance fraud. When another driver intentionally causes an accident for the payout, or claims injuries are much worse than they actually are, that’s insurance fraud. And according to the IBC, it’s a significant contributor to rising premiums, costing Ontario policy holders over $1 billion each year, or $236 per insured vehicle.
What Determines Your Car Insurance Rate?
To set your car insurance rates, your insurer will ascertain the risk it takes to insure you by considering a slew of pricing factors, including:
- Your driving record.
- The make, model and year of your car.
- Your postal code.
- Your daily commute.
- Annual kilometres driven.
- Your level of driver’s licence, i.e. G1, G2 or G.
- Your age and gender.
- The level of coverage you choose.
Your insurance company considers both the driver and the car when setting insurance rates. For example, two 35-year-old men driving Honda Civics in the same neighbourhood in Toronto will not have the same insurance premium if one has a clean driving record and the other has received a few speeding tickets in the past.
Is Car Insurance Mandatory in Ontario?
Car insurance is mandatory across Canada and you can face severe consequences if you’re caught driving without it, including hefty fines, licence suspension, vehicle impoundment and even jail time. Even if you have insurance but you can’t provide proof of insurance (commonly known as your pink slip) when you’re pulled over by police, you can face a fine of $5,000, plus a 20% surcharge—for a first offence.
Canada offers both public and private car insurance. Drivers in British Columbia, Saskatchewan and Manitoba must buy public or government-funded insurance (though supplemental coverage may be sourced from private insurers), while drivers in Ontario, Alberta, New Brunswick, Newfoundland, Nova Scotia and PEI have access to private insurance. Quebec offers a hybrid of both.
Here are the types of coverage that are legally required in Ontario:
- Third-party liability insurance. This pays for damage you cause to another person’s property, injuries you cause to others in an accident, as well as legal defence costs if you’re sued. The mandatory minimum is $200,000, but most insurers recommend coverage amounts of $1 million or $2 million.
- Accident benefits. This pays for medical costs, rehabilitation expenses and financial compensation, including income replacement, if you are injured in an accident.
- Direct compensation property damage (DCPD). With DCPD coverage, your insurance company pays for repairs to your car when you are not at-fault for a collision.
- Uninsured Automobile Coverage. This coverage protects you (and your family) if you are injured or killed by an uninsured motorist or a hit-and-run driver.
Your policy might also include the following:
- Collision or upset coverage. This coverage pays for the cost of repairing damage to your car following a collision with another car or if you hit another object, like a guardrail.
- Comprehensive insurance. This coverage pays for theft and damage due to fire, hail, flooding, vandalism, falling objects and animal strikes ( if you hit a deer, for instance).
- Specified perils: This coverage pays for specific perils listed on your policy, including: fire, theft or attempted theft, lightning, hail, rising water, earthquake, windstorm, an explosion, riot or civil disobedience, the falling or forced landing of aircraft or part of an aircraft, and the stranding, sinking, burning, derailment or collision of any kind of transport in, or upon which, a car is being carried on land or water.
- All perils: This is the most comprehensive (and expensive) coverage as it combines collision or upset and comprehensive coverages. It also covers loss or damage if a person who lives with you, or who works for you, steals your car.
How Much Insurance Do I Need?
While it can be tempting to reduce your insurance coverage to the $200,000 provincial minimum, this leaves you financially vulnerable if you get into an accident and you have a claim made against you. According to the IBC’s 2022 Facts of the Property and Casualty Insurance Industry in Canada, there were 281,351 third-party liability claims made in 2020, costing a total of $4.5 billion dollars, and 79,173 accident benefits claims made costing over $2 billion.
The average cost per claim in 2020 across Canada is as follows:
| Type of Coverage | Average Cost Per Claim |
|---|---|
| Third-party liability | $16,090 |
| Accident benefits | $25,508 |
| Collision | $7,983 |
| Comprehensive | $4,694 |
Most insurers will recommend you purchase higher liability limits under your third-party liability coverage to protect your family and your assets in case you are sued. You can also increase your accident benefits coverage, as well as add optional collision and/or comprehensive insurance coverage, depending on where you live and how often you drive. And if you lease your car, you may be required to carry both.
How to Lower Your Insurance Rate
The best way to lower your insurance rates is to keep a clean driving record. Once you start racking up speeding tickets or even get into a minor fender-bender, you will be rated as higher risk and your rates will go up. And if you’re caught driving while intoxicated, not only will your rates go up but you may have a tougher time getting insurance.
While shopping for a car, you probably consider factors such as fuel-efficiency, size, comfort and safety features. But another way to lower your rates is to drive a car that’s cheaper to insure. The Canadian Loss Experience Automobile Rating (CLEAR) system rating, built using actual claims data, is used by insurers to assess how likely it is that a specific make and model of a car will be involved in a claim and how much it will cost: The higher the CLEAR number the higher the risk, and therefore the higher the insurance cost. The IBC releases an annual edition of “How Cars Measure Up” using this CLEAR rating to give consumers information on the insurance risks of their particular vehicle.
How Can I Save on Car Insurance?
Car insurance may be a necessity, but rates can vary significantly between insurers. That said, it’s important to not scrimp on car insurance coverage. Rather than reduce your coverage limits, here are some ways to save money on your car insurance:
- Shop around. The best way to save money is to compare car insurance quotes from multiple companies. You can get free quotes online or by working with a car insurance broker. Independent insurance agents can give you quotes from multiple companies to save you time.
- Get the right amount of coverage. You’ll want to know how much car insurance you need, and an insurance agent can help you decide on coverage limits. While you don’t want to be underinsured, you don’t want to pay for more coverage than is necessary.
- Ask for discounts. There are more than a dozen common car insurance discounts, such as multi-policy discounts, winter tire discounts and bundling discounts, if you get your home and car insurance, for example, from the same company.
- Choose higher deductibles. Your deductible is the amount of money required to pay out of pocket. So if you choose to get comprehensive coverage, you could save more each month by choosing a $1,000 deductible over a $500 one.
- Be careful who you let drive your car. Your insurance follows your car, not you, so if you loan your car to a friend and he gets into an accident, that goes on your record. And if you let your friend drive your car on a regular basis but he’s not named on your policy, your insurer can deny the claim leaving you to deal with the financial consequences out of pocket.
The Bottom Line
While the rising cost of car insurance may make your household budget feel a bit tighter, it’s important to have the right coverage in place should disaster strike. The good news is there are ways to save on your premium without endangering your financial future.
