Auto Insurance Rates Continue to Rise

In the second quarter of 2019, Ontario auto insurance rates increased on average by 1.99% across the market. This follows an average increase of 2.70 % in the first quarter. When comparing the second quarter of 2018 with 2019, auto insurance rates in Ontario have increased on average 13.85% in one year

So why have insurance premiums gone up? According to Economical Insurance, there are several factors and not all of them are within your control.

Pricing Factors within your Control

There are many factors that go into determining the cost of your car insurance, from your choice of vehicle to your driving habits. These are a few common factors within your control that may cause your premium to go up at renewal time:

• You’ve been involved in an at-fault collision. Generally speaking, your insurance company rewards you based on the number of years you go without making an at-fault claim. When you make a claim following a collision where you’re determined to be at fault or partially at fault, you start over again and have to re-build your claims-free reputation.
• You’ve had traffic tickets or other violations. The more severe the violation or the number of violations, the more of an impact it will have on your premium.
• Your license has been suspended because of a traffic violation or other serious offence. If your license is suspended for an administrative reason (e.g., you forgot to renew it or it has been taken away for medical reasons), it shouldn’t affect your premium.

Pricing Factors outside of your Control

Sometimes your car insurance premium may go up even when you have a perfect track record and nothing seems to have changed. This can be frustrating, to say the least — but you’re not the only one experiencing this type of increase. We’ll explain what’s happening behind the scenes that are contributing to industry-wide price increases across the country.

Before we get started, it’s worth noting that car insurance premiums are regulated by the government. If your car insurance company wants to increase its rates, it has to apply to a government body — and its application has to be approved before rates increase. These are a few of the reasons insurance companies are applying to increase their rates:

1. Technology in modern vehicles costs more to repair. Many modern vehicles are built with advanced driver assistance systems that help keep you and your passengers safe. The flip side? These systems involve complex sensors and computerized components that are expensive to repair.
2. Distracted driving is on the rise. Not only does this mean that the number of accidents is increasing, but the damage that occurs in distracted driving-related accidents tends to be more severe. As the frequency and severity of claims increase, so do car insurance premiums.
3. Car insurance fraud is affecting the entire industry. In Ontario alone, the Insurance Bureau of Canada reports that car insurance fraud costs drivers an estimated $1.6 billion each year (or about $236 per driver). Insurance companies are working to reduce instances of car insurance fraud and minimize the impact they have on customers.
4. Medical services are becoming more expensive. If you’re in an accident and need physiotherapy, for example, the cost of an appointment is likely higher today than it would have been in the past. Insurance companies have to factor an overall increase in medical expenses into their premiums.
5. Trends in your area show that you’re now at higher risk for collisions, theft, or other incidents. Insurance companies need to charge their customers enough that they will be able to pay all claims that are made — so as your risk of making a claim increases, so will the cost of your insurance. Your premium may increase if your insurance company’s advanced analytics show that your area has become more prone to congestion or extreme weather events that lead to collisions, for example.

How you can save on car insurance

As you can see, there are a number of factors that contribute to increased car insurance premiums, and unfortunately you can’t control every detail that goes into the calculation. But the good news is there are plenty of things you can do to stabilize or lower your premium:

1. Maintain a clean driving record – even one driving conviction can increase your premium
2. Do not text and drive – any type of distraction while driving can lead to an accident and some companies are now considering this a major conviction.
3. Increase your deductibles – you can reduce your premium by increasing your collision and comprehensive deductibles. But make sure you can afford pay the deductible should a loss occur.
4. Remove coverage – if you have an older vehicle, consider removing the collision and even the comprehensive coverage to reduce your premium. But make sure you can afford to repair or replace your vehicle in the event of a loss. 

Sources:

• FSCO
• Economical Insurance
• Insurance Business Canada