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Why Insurance Is So Expensive in Ontario & What You Can Do About It

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It’s no secret that Ontarians have some of the highest auto insurance rates nationwide.

This is a popular topic for major news outlets and certainly gets drivers’ attention when those annual premium notices go out.

“But why?” is the common refrain. Everyone is concerned about the cost of their insurance, from high-risk drivers to drivers with a spotless driving record.

Even officials representing the Insurance Bureau of Canada (IBC) acknowledge that Ontario’s auto insurance premiums are high and that the industry is struggling to get a handle on the situation.

What can you do to control your auto insurance costs when you live in the priciest province in the nation? We’ll show you: read on to find out!

Shop Around & Don’t Settle for “This Is the Best Rate You’re Going to Find”

Shopping around is a smart play. While the insurance industry as a whole uses some common factors such as age, gender, location, make/model, driving habits, driving record, etc.), individual insurers file their own rates. Different insurance companies reward different customers with a better price. As an example, Company A may have collected data that tells them that customers who park their car in their driveway have fewer claims than customers who park on the street. They may give a discount to those people. Company B may never have looked at that aspect of setting rates. If you are insured with Company B, you may be getting their best rate, but not the best rate available.

Similarly, because bottom-line price is such a powerful motivator for customers to switch insurers, insurers are free to offer their own incentives and discounts to retain customers and build loyalty. So if an insurance broker tells you that their offer is “the best you’re going to find,” keep looking. Chances are good they know their offer isn’t the best!

Buying your insurance from an insurance broker such as Mackay Insurance gives you an advantage over people who buy from a 1-800 number with only one option for them. Your broker can do some of that legwork for you and check which is the best insurance company for you.

Even if you are insured with a broker, periodically stop in and talk to them about your options. Your circumstances may have changed, and they may now have a better answer for you. A good time to touch base with your broker is when you get your annual renewal notice. And remember that no broker represents every insurance company there is. Periodically  check the market yourself and satisfy yourself that you are not over-paying for your insurance.

Talk to Mackay Insurance for help with this. We represent many different insurance companies and can shop around and find the best deal for you. In addition, our knowledge and expertise can help find you discounts and rate reductions you may not have otherwise known about!

Carefully Review Your Insurance Discount & Savings Options With Your Broker Annually

Did you know that insurers will now discount your premiums if you install snow tires on your vehicle during the winter season? You may be able to save up to 5 percent for making this seasonal change! But you have to tell your broker or agent, or they won’t know to add the discount to your policy.

Some insurers will give you a discount if you choose to install a special app on your phone. This app is sort of like the black box on an airplane. It monitors your driving habits and can analyze this data to identify additional discounts you are eligible for (like not driving at night or regularly slamming on your brakes) to further lower your premium payments.

Another potential way to get discounts is to make your vehicle more difficult to steal! Anti-theft alarm systems and secure garaging may translate into lower risk to insure you and thus a premium discount.

Other Mainstream Ways to Lower Your Auto Insurance Premiums

While you might not love all of these savings options, each one does offer a potential avenue for lowering auto insurance premiums.

Consider a higher deductible

The deductible is the amount you pay personally if there is a claim, and the higher the deductible, the lower the premium. It generally is not advisable to put in very small claims anyway, and if your budget can handle paying a larger deductible if there was a larger claim you may as well save some premium and take a higher deductible.

One word of caution is to check what the actual savings are, as there is often something called a “diminishing return” on taking higher deductibles. For example, it may save you enough premium to be worth changing from a $500 to a $1,000 deductible, but you may find that the savings to bump the deductible from $1,000 to $2,500 don’t save you enough to make that next change. Every situation and every budget is unique, so talk to your broker about your own situation.

Drop your comprehensive and/or collision coverage

The Financial Services Commission of Ontario (FSCO) points out that an older, lower-value vehicle may not merit the additional, optional collision and/or comprehensive coverage you would want with a new vehicle.

Bundle your policies

When you purchase more than one type of insurance with the same broker, you may qualify for a discount of anywhere from 5 to 15 percent on your aggregate premiums.

Pay your premiums annually in one lump sum

It typically costs insurers less in administrative overhead to collect premiums in one annual lump sum than to send out and monitor monthly payment reminders. If this fits your budget you can save service charges.

In between paying monthly or paying for a full year is another option to investigate. Many insurance companies have an option to pay in two or three installments and do not charge the finance fee they would if you paid monthly.

Get in Touch

Are you shopping around for a lower rate on insurance? Our talented, seasoned brokerage team would love the opportunity to assist!

Contact us online or give us a call at 888-853-5552.

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