Car insurance in Toronto can be an expensive proposition. Since postal codes are used as a factor in determining your auto insurance premium, it’s no surprise that drivers in the greater Toronto area pay more for car insurance than almost any other city in Canada. The logic behind using postal codes to calculate auto insurance premiums is to reflect the likelihood of accidents in a specific geographical area.
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The subject of using rating territories and postal codes for generating insurance premiums is a controversial one. Many people feel that the practice is unfair and a rating system that truly reflects a driver’s merit should take priority in consideration. Companies like CAA are stepping up to the plate and expanding its product base to include “pay as you go” or temporary car insurance.
Average Cost of Car insurance in Toronto
The average cost of car insurance in Toronto is roughly $2,000 according to thinksure.ca. However, even if a reasonable sample was used to generate an average monthly auto insurance cost of approximately $170 a month, every driver presents a whole new risk and auto insurance premium. This means that a driver’s history, past claims, at-fault accidents, tickets, a record of non-payment, the nature behind the use of the vehicle and the vehicle itself are all factors that can change the cost of car insurance for the Toronto driver.
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Not all insurance brokers in Toronto are created equally
Holding a R.I.B.O (registered Insurance Broker of Ontario) license doesn’t automatically make a Broker independent. Many insurance companies sell directly to the consumer and still hold a RIBO license. This can be confusing for some people who might assume that a registered insurance broker of Ontario is always independent. The difference between independent and captive insurance brokers is that the former can have many distribution contracts with several insurance companies, while the latter usually sells the products of one company.
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How to reduce your car insurance premium in Toronto
Some points to keep in mind when trying to reduce the cost of auto insurance in Toronto:
Increasing your deductible – the entire point of having a deducible is to lessen the frequency of small claims and allows the policy holder a way to save on their overall insurance premium. A deductible is also called a Self -Insured retention or SIR, which means you agree to contribute to the first portion of the loss, up to a specified limit. Although every auto insurance company licensed to write car insurance in Toronto has its own rules regarding deductible amounts eligibility and so on, you are typically allowed to increase your deductible. Increasing your deductible brings down your premium because you’re willing to take on more risk, and at the same time, taking some risk away from the insurer.
Switch your Vehicle Type – Some vehicles are more expensive to insure than others. In Canada, insurance companies and regulators use the CLEAR system for rating automobile insurance premiums. Clear stands for Canadian Loss Experience Automobile Report and is used by auto insurance companies in Canada to help calculate auto insurance premiums. The basis of the CLEAR system is a statistical analysis of each make and model of vehicle as it relates to the number of car accidents, the cost of repairs, and the frequency and severity of injuries that are probable from driving a particular make and model of vehicle. From those statistics, insurance Underwriters and Actuaries determine the cost of insurance coverage under the automobile insurance policy. CLEAR is only one component in the calculation of your car insurance premium.
Do not assume that car insurance to be cheaper for older and less expensive vehicles. This is almost always not the case. At one time in history, Insurance companies used the MRSP, manufactured suggested retail price, to help factor auto insurance premium.
Reduce Insurance coverage – reducing auto insurance coverage is usually never a good idea, but if your risk tolerance can handle it than this option is sometimes available to you. For example, reducing your liability coverage from two to one million dollars, or removing collision coverage from an older vehicle. It’s always a good idea to speak with your insurance broker or intermediary about why you require reducing your insurance, as there may be things not considered that may leave you exposed. Living in a large metropolitan city such as Toronto, where
Shop around for Car insurance – shopping for car insurance in Toronto can be overwhelming. There are more insurance brokerages, insurance agencies and insurance companies in Toronto than anywhere else in Canada. Not only do you have to contend with choosing the appropriate purchasing channel but you also need to know how to get the best insurance coverage for the most affordable price. Knowing the differences between an insurance broker, and an independent insurance broker, a captive insurance broker, insurance agent, managing general agent, direct writer insurance company (sells directly to the consumer), will help you understand how car insurance works in Ontario and ultimately save you money!
Car insurance rates are regulated in Toronto, and also the rest of Canada, but that doesn’t mean you can purchase the same product from ANY insurance broker. As mentioned earlier, the more insurance companies a broker can select quotes from the better the chance of getting the best coverage for the best price. An insurance brokerage can quote you only from the pool of insurance companies they represent or have distributions agreement/contracts with. Keep that in mind when a broker tells you that’s the “cheapest”, as most times they are referring to the “cheapest” THEY can offer!
Bundle your insurance and save in discounts
The easiest way to save on auto insurance is to bundle your insurance under one insurance company. Most insurance companies will offer a considerable discount for combining your habitational and vehicle insurance, or even adding more than one vehicle to your auto policy can bring you savings.
Savings as much as 30% for combining home and auto insurance are always being offered by insurance companies. Insurance companies benefit from having multi-line customers, as it brings a hedging component to the equation (home or habitational insurance) and also a good way to bring in new business. The hedging factor behind home insurance is that it off sets the losses insurers suffer from their auto insurance business. Home insurance claims are less frequent and the loss of a claims free discount (which is substantial in habitational insurance) deters people from claiming from their home insurance policy.
Group Insurance Discounts
Group insurance is used by many employers to give their employees the benefit of savings on their insurance needs. Some insurance companies offer group insurance discounts to members/employees of the group, which another way of saving on your car insurance, not only in Toronto but anywhere in Canada.
Affinity Group Discounts
Affinity group discounts are very similar to group insurance. One major difference is that the group discount is purchased for professional or organizational groups and not employers. Organizations such as the Ontario Medical Association, Masons, Welder’s Association, School Alumni, etc., are examples of affinity groups.
Get car insurance quotes, monthly!
Getting a quote every month might seem unnecessary or too much of a hassle but the truth is that rates change monthly from one insurance company to the other. This can present a savings opportunity for you. If you decide to switch your car insurance, midterm, a “cancellation fee” or short term cancellation fee is applied. The short term cancellation fee deters a lot of people from breaking their auto policy before the renewal or anniversary date. However, sometimes the savings from switching from one auto insurance company to another will be more than the cancellation fee. For example, you decide to switch car insurance companies because you know that an At fault accident or ticket is coming off your record which will result in a substantial decrease in your auto insurance premium. Bottom line is that if the savings are more than the penalty for breaking the contract early than it probably makes sense to do it!
Be a cautious driver
It is no surprise that driving according to the law and minimizing traffic infractions /accidents can dramatically decrease your auto insurance premium. In Toronto, Ontario, traffic tickets stay on your MVR, motor vehicle record for three years. Accidents stay on your record for 5 years and driver’s license suspension for two years. *although a driver’s license suspension is on your driving record fort two years an insurance broker or agent would know of the suspension even if it’s not on your driving record any longer. Usually, driver license suspensions are tied to other infractions that would shed light on a driver’s license suspension even after it is removed from your record.
High risk car insurance Toronto
High-risk car insurance in Toronto can be staggering at price. Being in the high-risk driver category alone is more expensive than regular car insurance. Now include the Toronto jurisdiction in the premium rating and you have a recipe for some very expensive car insurance.
You really can’t escape the fact that your postal code will affect your auto insurance premium, whether in a good or bad way. Since the greater Toronto area is the heavily most populated area in Canada, it’s no surprise that the traffic congestion caused by the population density is one of the main reasons Toronto has such expensive car insurance. Collisions, auto thefts, pedestrians being hit by vehicles, hit and runs, etc., are more frequent and even more severe compared to less populated places. This is just the law of large numbers used in the calculation of auto insurance premium in Ontario, and also in other Provinces in Canada as well.
Sometimes a driver’s risk profile is too risky, even for the high-risk auto insurance market. In situations where you don’t meet eligibility guidelines for any standard AND non-standard company risk, your last option is the facility association.
The Facility Association is an insurance pool that auto insurance companies from select provinces contribute according to the insurance act of Canada and administered through select private insurers. Their mandate is to keep car insurance in Canada affordable and fair for the consumer. Since every licensed driver in Canada is entitled to car insurance by law, the role of the facility association continues to be the auto insurance of last resort for some drivers.
Car Insurance Toronto FAQs
How do I find cheap car insurance in Toronto?
Finding the cheapest car insurance rate in Toronto requires the same exercise as trying to find cheap car insurance anywhere else in Canada. To find cheap or cheaper auto insurance in Toronto you need to shop and get as many quotes as possible, from various distribution channels.
The three main distribution channels for car insurance in Toronto are:
– An Insurance Broker: an insurance broker is an intermediary who sells and distributes the product and services of more than one insurance company. An insurance Broker may have distribution agreements with many auto insurance companies, which would open the door to multiple car insurance quotes. It’s a no brainer that the more options you can select from the higher the chance a cheap or more affordable option can present itself. The most important factor in securing an affordable car insurance quote is to find an Insurance Brokerage with as many distribution agreements with Insurers as possible. The more distribution agreements an Insurance brokerage has with Insurance companies the better the chance of you securing a lower rate. The more insurance companies you can get a quote from the better your chance of getting a cheaper car insurance quote. This applies anywhere in Canada not just Ontario or Toronto. Shop till you drop and know that insurance brokerages are not created equally. That is, don’t assume that any insurance broker can provide the same insurance rate as any other broker.
– Insurance Agent – an Insurance agent sells and service auto insurance, mainly from one company. Insurance agents are usually employed by Direct Writer insurance companies, which means they can sell directly to the consumer public as employees of the insurance company. Essentially there is no “middleman” between the insurer and the insured. A good example of a direct writing insurance company could be TD Insurance, RBC Insurance, Allstate Insurance, just to name a few
– Independent Insurance Agent – an independent Insurance agent is very similar to an Insurance agent but works as an independent contractor. From a legal business structure, independent insurance agents are separate from the insurance company they represent. Although an independent insurance agent is a separate legal entity from the insurance company, they typically sell the insurance products of one company. A good example of this would be State Farm Insurance or Desjardin.
Where can I buy auto insurance in Toronto?
Auto insurance can be purchased online or physically at an insurance agency or brokerage.
You can purchase car insurance directly through an insurance company; Insurance agent or you can choose to use an insurance broker of Ontario. Knowing the differences between insurance providers is crucial, especially if you’re looking for the best coverage for the best price.
– Insurance Agent – an Insurance agent sells and service auto insurance, mainly from one company. Insurance agents are usually employed by Direct Writer insurance companies, which means they can sell directly to the consumer public as employees of the insurance company. Essentially there is no “middleman” between the insurer and the insured. A good example of this would be TD or RBC insurance.
– Insurance Broker – An insurance broker is an intermediary who helps find the best and most affordable auto insurance for you. Insurance brokers are also responsible for ensuring that your insurance needs are met, through remarketing for better prices or explaining insurance coverages and auto claims procedure. Most insurance brokers and brokerages in Toronto, posit themselves as independent and a separate legal entity from the insurance companies they represent, but that is not always the case.
– Independent Insurance Agent – an independent Insurance agent is very similar to an Insurance agent but works as an independent contractor. From a legal business structure, independent insurance agents are a separate entity from the insurance company they represent. Although an independent insurance agent is a separate legal entity from the insurance company, they typically sell the insurance products of one company. A good example of this would be State Farm Insurance or Desjardin.
– Managing General Agent or Wholesale Broker – a Managing General Agent (MGA), or Wholesale Broker works as an intermediary for both retail insurance brokers, Insurers and sometimes with the insured. An MGA mainly works to find specialized insurance coverage, while having no contact with the insured.
How much does car insurance cost in Toronto?
The cost of car insurance in Toronto and surrounding Greater Toronto Area (GTA) can be very expensive, or even unaffordable!
According to Thinkinsure.ca, the average cost of auto insurance in the GTA is $2,071, which works out to be roughly $173 a month. However, this statistic is based on a Toronto driver with at least ten years of driving and insurance history, and also a clean driving record. Once driving tickets, at-fault accidents and driving experience are factored in the cost of car insurance, the price increases proportional to your driving record.
How much is car insurance in Toronto for a new driver?
Car insurance for a new driver in Toronto can range from $2,000 to $11,000. The broad range of auto insurance prices for new drivers in Toronto stems from the multitude of factors that factor in the whole auto insurance premium. Every driver in Toronto presents a different risk and location is just one factor in the entire car insurance premium.
Some additional factors that contribute to the cost of auto insurance for new drivers in Toronto are as follows:
– The Vehicle itself – based on insurance bureau statistics that measure the likelihood of an injury or extent of damages of a vehicle based on make and model of car.
– How you use the vehicle – whether you are using your vehicle for commuting, pleasure or for commercial reasons will affect the cost.
– Driver Training – Auto Insurance companies offer discounts to new drivers with accredited driver training, which can save some money, typically for three years of receiving your G2 driver’s license. Driver training accreditation will not affect your insurance cost if you’ve accumulated over three years of driving experience.
– A principal or Occasional Driver – being a new driver in Toronto can be an expensive proposition based on your location and lack of driving experience, alone. Being classified as a principal driver will cost you even more than as an occasional driver under your Parents or Guardian’s auto policy. The difference can be substantial but it is not a reason to fudge the truth about how the vehicle will be used. Keep in mind that there are serious consequences for omitting and being dishonest on an automobile insurance application. Your insurance company could drop you, deny a potential claim and will affect the cost of your future auto insurance.
– Out of Province or Country Driver’s Experience – most auto insurance companies in Toronto will honour and accept driving experience from another country, or from outside of Ontario, which could be credited towards your driving experience and history in Ontario. If you’re not new to driving, but new to driving in Toronto, getting credit for driving and auto insurance history from outside of Ontario might save you some money!
How to get cheap car insurance in Toronto?
The best way to find the cheapest car insurance in Toronto is to simply shop around. Although getting auto insurance quotes is a simple task, it can be overwhelming, tedious and frustrating. The upside of doing a comprehensive search for cheap auto insurance is that you will find the most affordable auto insurance. By doing an exhaustive search, getting as many quotes as possible, trying different distribution agents, you will see that the cheapest car insurance is always relative to what that business can offer. This means that a company will always tell you the cheapest auto insurance quote they can offer. It doesn’t mean that more affordable options are out.
Here’s an example:
Insurance Brokerage A provides an auto quote from Aviva Canada, Economical Insurance, Jevco, Intact, Travelers and Aha Insurance
Insurance Brokerage B offers quotes from only three of the auto insurance companies that insurance brokerage A offers.
If the cheapest auto insurance quote came from an insurance company not being represented by Brokerage B, then the most affordable option would come from Brokerage A. An insurance company, Brokerage or Agency will only be able to offer the cheapest car insurance that they can sell you. So, if anyone claims “that’s the cheapest” it usually the cheapest they can offer, not necessarily what you could get in the marketplace.
Why is car insurance expensive in Toronto?
Car insurance in Toronto is expensive mainly because of population and traffic density. Toronto has a population of over three million people. If you can imagine a population base where an average family has two vehicles, that’s a lot of vehicles on the road! The more people on the road, the more likely accidents, and injuries happen.
Insurance companies are forced to pay out on a higher claim frequency in Toronto, compared to cities that have less population and traffic density. This means that the insurance “pool” is being used mainly by drivers of the Toronto area which insurance companies calculate and make reflective on the cost of car insurance in that area.
Which car has the cheapest insurance in Toronto?
It’s difficult to pick a singular vehicle and class it as the “cheapest” to insure. Your car insurance premium is an inclusive amount that includes your driving profile, driving history and other factors that make the sum of the premium cost. It would be difficult to separate the risk amount attached to the vehicle itself, from all the other factors that help calculate your auto insurance premium.
As mentioned earlier, auto insurance companies in Toronto use the CLEAR rating system to establish auto insurance premiums. Based on statistical data, insurance Actuaries and Underwriters can determine the likelihood and extent of injuries or damages resulting from an accident involving a particular make and model of vehicle.
Car insurance premium in Ontario is broken down into specific coverages, which include all mandatory and optional loss coverages. Each specific coverage is attributed to a price that reflects the rating basis that was calculated by the CLEAR system. The price associated with each insurance coverage reflects the likelihood and severity of injuries and/or property damage resulting from that specific make and model of vehicle could or has already statistically proven.
For example, a Honda Civic has been historically known as a very popular vehicle to get stolen. Therefore, the cost of comprehensive insurance coverage would cost more, since the peril of theft is covered by comprehensive or All Perils car insurance coverage.
Another example could be a pick-up truck. Pick-up trucks usually generate a lower premium cost for Accident Benefits coverage compared to a private passenger sedan or car. Since pick-up trucks are usually larger and heavier than a car or motorcycle the odds of becoming injured in a vehicle accident while in a pick-up truck are much lower. This would probably result in a lower accident benefit cost
A third example could be a higher-end luxury vehicle. The cost to repair higher-end vehicles such as Mercedes, BMW, Audi and exotics vehicles generate a higher collision, All-Perils, and Direct Compensation Property Damage (DCPD) coverage. Since the cost of repairs and maintenance for higher-end vehicles is much more, the cost of Collison, All Perils and DCPD coverages will also cost more.
Getting car insurance quotes directly from your insurance broker or agent is the most convenient way to price out car insurance in Toronto, or anywhere else! All you need to do is call or email them, provide the vehicle details (VIN# would be ideal) and they will try and find the most affordable auto insurance coverage.