Published by Programme B
Drivers in Ontario are being overcharged on their motor insurance premiums. Reliable figures show an overpayment totalling $5 billion in the last five years alone. This is an astounding $1437 annually for each policy taken.
These figures may not come as a surprise. Ontario is by far the most expensive province to insure a car in Canada, according to My Choice Car Insurance. The premiums in Ontario average 45% higher than Alberta which is the second most costly.
In 2016 alone, Ontario car insurance firms made a $1.5 billion pre-tax income. This was a 60% increase in revenue, over a four- year period. While claims reduced by 27% in 2011, the premium drivers were paying remained constant.
Premiums vs. Claim Payments
In the same breath, accident benefits have been repeatedly slashed by the government, meaning families in the province are paying more in premiums, but getting less in paid claims.
A study commissioned by the Ontario Trial Lawyers Association concluded that drivers in Ontario should have paid $100-$120 less than what they paid to auto insurers in 2013. This brought the total overpayment to $840 million in that year alone. By law in Canada, car insurance is taken out to cover the owner/driver, passengers, and pedestrians involved in a collision.
Calculating car insurance premiums
Some of the considerations taken into account when calculating premiums include:
1. Details of your car: model, make and year of manufacture.
The model of your car gives insurance data on which models are likely to be vandalized as well as which makes are pricier if you make a claim. The assumed risk corresponds with the premium amount.
2. The car owners’ demographics
These demographics relate to age, marital status, and gender. Anyone under 25 is considered high risk and may have higher premiums. In Ontario, males under 24 years of age have the poorest record as a group and hence pay more.
3. Your driving license class and frequency of car use
The more you use your car, the higher the chances of a collision or vandalism. If you use your vehicle frequently, your premiums will be higher than a car owner with less use.
4. Your residential location
Residing in densely populated areas comes with higher premiums as well. The assumption here is that chances of collusion and vandalism are higher.
5. Your driving history including insurance history, driving-related convictions, and tickets.
Aside from this personal profile, your premiums also vary depending on coverage, deductibles, and your insurance partners’ internal processes. The province you’re in comes into play as well. For example, while you pay a higher amount in car insurance as an under 24 male in Ontario, in Manitoba and Saskatchewan provinces, the premium rate is charged at standard rates across the board.
Among the solutions touted to bring insurance costs down in Ontario include rooting out fraud. Insurance fraud stems from organized crime rings that stage manage collisions as well as medics who inflate treatment costs. Fraud alone costs Ontario consumers $1.3 billion annually.
The good news is that there are ways to ensure lower premiums, without conceding on good coverage. As with most services, shop around and talk to several providers to get comparative quotes. It also helps to insure all your cars under one insurer, complete a certified driver program and bundle your home insurance with your car insurances whenever possible.