How to reduce car insurance costs in Ontario

Many Ontario drivers are on the lookout for practical methods to decrease their car insurance rates, especially given the increasing complexities involved. A common question we receive is, “Why is my premium higher than that of my friends or neighbors?” The answer isn't straightforward, as factors influencing rates extend beyond age or geographic location. We've identified at least 21 elements that can affect your car insurance premiums. Are you aware of these factors? Below is a detailed, unordered list of the key elements that influence your car insurance rates and strategies to help you lower your costs.

Vehicle Specifications

The type of vehicle you choose can significantly impact your insurance costs. Insuring a luxury car like a BMW typically costs more than insuring a Honda Civic. The cost isn't just about physical damage coverage; it also involves the risk of injury coverage. The safety rating of a vehicle can greatly affect your premium as well.

Age and Purchase Date of the Vehicle

Newer vehicles tend to have a higher replacement value, making them more expensive to insure. However, some insurance companies offer discounts for new cars, operating under the belief that buyers of new vehicles are less likely to have accidents. While it's illegal in Ontario to use credit scores for determining insurance rates, providing discounts for new vehicle purchases is allowed.

Geographic Location

Your residential area is often a significant determinant of your insurance costs. Urban areas tend to have more vehicles and hazards, resulting in higher premiums compared to suburban or rural regions. Generally, living closer to a major city, like Toronto, results in higher rates, as they are based on historical claims data, with the Greater Toronto Area having the highest rates in Canada.

Insurance Coverage Options

The type of coverage you choose also affects your insurance rate. Decisions about collision vs. comprehensive coverage, liability limits, and deductibles play a crucial role. If you’re unsure about these options, it’s wise to consult with a broker who can help tailor a plan that balances coverage and savings.

Winter Tire Installation

Installing winter tires can not only enhance your safety during Ontario's harsh winters but may also lead to insurance discounts, typically ranging from 2% to 5%. Be sure to inform your broker if you have winter tires.

Age Considerations

Your age influences your insurance rates, particularly if you are under 25. Young drivers typically face higher rates due to a greater likelihood of accidents, especially severe ones. As you age, especially into your fifties and sixties, you may qualify for additional discounts.

Marital Status

For males under 25, marital status can significantly impact rates. Married individuals often enjoy lower premiums, possibly due to statistical evidence showing that married men tend to have fewer accidents.

Gender

Your gender can also affect your insurance rates, particularly for younger drivers, with males generally paying higher premiums than females. Additionally, the Ontario Ministry of Transportation now recognizes a non-binary gender designation ('X'), which allows individuals to select this option on their driver's license. These individuals will be offered the lower rates between male and female premiums.

License Tenure

The length of time you've held a driver’s license can positively influence your insurance costs. The more experienced you are (whether you have a G1, G2, or G license), the more likely you are to receive lower premiums.

Continuous Insurance History

Having a long history of uninterrupted insurance coverage can lead to lower premiums, as it demonstrates reliability and a lack of claims.

Loyalty to Insurance Provider

The duration of your relationship with your current insurer is important. Some companies reward loyalty, and staying with the same insurer can help secure better rates.

Claims History

Previous "at-fault" claims will negatively affect your premiums. There are many misconceptions about no-fault insurance in Ontario and how it impacts rates; however, having at-fault accidents on your record, especially within the last six years, will likely lead to higher costs.

Traffic Violations

Any traffic violations from the last three years can influence your insurance rates. Convictions can be categorized as minor, major, or serious, each having varying degrees of impact on premiums. However, it's important to note that parking tickets do not affect insurance rates.

License Suspensions

Having your driver's license suspended due to unpaid fines or demerit points can also raise your insurance costs. It's crucial to keep your license in good standing.

Insurance Policy Cancellations

You might not be aware that having your insurance policy canceled due to non-payment can negatively affect your future rates. Multiple cancellations may hinder your ability to secure a payment plan or even obtain insurance from certain providers.

Mileage

The number of kilometers you drive each year can affect your premiums. Generally, the more time you spend on the road, the higher your risk of an accident, which can raise your rates.

Daily Commute

The distance of your daily commute can also influence your insurance costs. A long commute, such as traveling from Hamilton to Toronto, will likely lead to higher premiums compared to a short commute.

Available Discounts

Many discounts are available for auto insurance. For instance, you might qualify for a discount if you insure multiple vehicles or bundle your auto and home insurance. Additional discounts may include those for being conviction-free, being a retiree, completing driver training, or being a good student, so be sure to discuss these options with your broker.

Group Rates

If you belong to a professional association, alumni group, or work for a large company, you may be eligible for special group rates or discounts. Members of CAA also benefit from unique discounts.

Vehicle Usage

How you use your vehicle can greatly affect your insurance costs. Vehicles used for business purposes, client visits, or deliveries typically incur higher premiums compared to those used solely for personal pleasure.

Usage-Based Insurance (UBI)

Usage-Based Insurance (UBI), also known as telematics, rewards safe driving behavior with potential discounts of up to 20% annually. Drivers who demonstrate safe habits—such as avoiding speeding or hard braking—can benefit from these discounts. Participation usually starts with a 10% discount for enrollment, followed by an additional 15% for maintaining safe driving practices, potentially leading to a total savings of 25% on your auto insurance.