Why Is Car Insurance So Expensive In Ontario?

As you may know, the price of car insurance varies from province to province.

Some provinces, like Quebec, have a low average car insurance rate, while other provinces, like Ontario, have high rates.

To be precise, the province of Ontario has the second highest auto insurance rates in Canada (based on provincial averages in 2021).

This leads to the question, "why is car insurance so expensive in Ontario?". We're glad you asked!
 

Today's article will answer this question and many more. So, if you want to learn why car insurance is so expensive in Ontario, be sure to continue reading.

How much is car insurance in Ontario?

The average cost of auto insurance coverage in Ontario is roughly $1,920 per year (or approximately $160 per month). As of writing this article, the city of Vaughn has the highest insurance rates in Ontario, sitting at roughly $2,179 per year (or approximately $181.50 per month).

When compared to the Canadian average of roughly $1,320 per year (or $110 per month), it's clear that Ontario car insurance rates are high.

*The above pricing is based on a 25-year-old driver with a clean record, 10,000 km driven annually and a car that's three to ten years old.*

Why is insurance so expensive in Ontario?

There are several reasons why car insurance is so expensive in Ontario, some of which include the following factors:

• Poor weather conditions
• Insurance fraud
• The rising cost of vehicle repairs
• High accident rates

Poor weather conditions

Like most of Canada, Ontario experiences its fair share of poor weather, particularly in the winter.

During the winter, drivers need to deal with poor visibility (from snowfall), slippery roads and a wide array of other risks related to winter driving.

Additionally, Ontario experiences a number of heavy ice storms, which are known to cause significant amounts of damage. For instance, an unexpected ice storm in 2018 resulted in approximately $190 million worth of damage in Ontario.

That being said, winter isn't the only season that poses a risk to Ontarians. During the summer months, Ontarians have to face a number of weather-related hazards, like wind storms. As an example, in 2021, a tornado in Barrie, Ontario, caused upwards of $100 million in physical damage to personal property.

You may be asking yourself questions like, "what does the weather have to do with car insurance in Ontario?".

Simply put, the growing rate of natural disasters and poor weather conditions increases the quantity of on-road losses, like collisions, and off-road losses, like damage caused by a falling object. To deal with the growing number of losses, car insurance companies need to charge policyholders more for coverage.

Insurance fraud

Car insurance fraud is a growing issue in Ontario. For those that don't know, insurance fraud is the act of intentionally providing an insurance company with false information for financial gain.

When someone commits insurance fraud, their actions don't just affect car insurance companies — insurance fraud also affects everyday policyholders like you!

When a fraudster successfully commits insurance fraud, they take funds from a collective "pool". This "pool" of funds is made up of money contributed by policyholders and is used to reimburse drivers after they file a claim. However, if fraudsters take too much money from the collective pool, then there isn't enough for other drivers when they need to make a claim.

Car insurance companies are forced to increase the cost of car insurance rates to offset the losses.

The rising cost of vehicle repairs

Although this may not be province-specific, the rising cost of vehicle repairs does play a part in the high cost of car insurance in Ontario.

Modern vehicles often come with powerful parts and innovative technology that make the driving experience easier, more enjoyable and… more expensive?

Unfortunately, yes. The state-of-the-art parts and nifty gadgets in your vehicle may be fun to show off, but they also increase the repair value of your car.

Specialized automotive technology, like lane-changing cameras, require more time and effort to repair than a standard piece of a vehicle, like a bumper. Because of this, modern automotive technology can be costly to repair.

The repair cost is a crucial aspect that insurance companies use to determine car insurance rates in Ontario, as it directly impacts how much they need to pay if a policyholder experiences a loss.

So, if vehicle repair costs are on the rise, Ontarians can expect to see an increase in their car insurance rates.

High accident rates

In 2021, Ontario experienced a ten-year high in deaths resulting from high-speed collisions (81 deaths). In the same year, there were 315 fatalities due to collisions in Ontario (a roughly 3% increase from the previous year).

The increase in auto accidents in Ontario has a significant impact on car insurance rates. A rise in accidents increases the risk of operating a vehicle on Ontario roadways. To offset the additional risk, car insurance providers need to increase car insurance rates for everyday drivers.

Want to save on car insurance in Ontario? Reach out to Surex today!

Car insurance can be expensive in Ontario, but it doesn't have to be.

When you shop with Surex, you get access to over ten of the province's top insurance companies. Having access to quotes from a wide variety of insurance companies makes it easier for policyholders to compare products quickly. Think of us as the "one-stop-shop" of car insurance quotes in Ontario.

Contact one of our experienced insurance advisors (our preferred term for insurance brokers) to receive up to ten personalized car insurance quotes in ten minutes or less (the number of quotes varies by location).

While you're chatting with your personal insurance advisor, don't forget to ask about how you can save up to 25% when you bundle your policies with one of our partners.

Want to learn more about the factors that affect car insurance rates in Ontario?

Unfortunately, we can't list all of the factors that affect car insurance rates in Ontario in a single blog. If you would like to get more information about auto insurance in Ontario, or have questions regarding your policy, don't hesitate to reach out to a Surex insurance advisor.