Why do people pay different prices for Car Insurance in Canada
All around Canada, consumers are finding themselves paying differing prices in car insurance for the same product.
A report updated in February 2020 shows a rapid increase in automobile insurance rates. Around 20% of the rates have increased and continue to do so. Drivers are paying more without experiencing any damage and loss.
However, there are several reasons people pay different prices in automobile insurance in Canada.
Factors affecting the cost of automobile insurance in Canada
The cost of automobile insurance depends upon several factors, including your demographic information, driving experience and history, the vehicle itself (vehicle usage and winter tires), and the location where you live and park your car.
1. Driving Experience
The driving experience includes the time of driving your car while living in Canada. The insurance dealers identify your driving experience through the number of miles your vehicle has covered. The more driving experience, the more charges you will have to pay.
2. Driving History
The number of accidents and mishaps during your driving experience is considered as your driving history. If you have experienced more casualties, it is more likely that you will pay more. On the other hand, car insurance price will be less for a person with no accidents in his/her driving history. The same will be the case if you have speeding tickets.
3. Demographics (Age and Gender)
The next primary factor that affects automobile insurance costs and the reason people pay differently for car insurance is their demographic information. The two demographic features, i.e., age and gender, account for the variation in automobile insurance prices. If you are a young person, you will probably pay more for car insurance than the older person with more experience. On the other hand, females pay less for car insurance as compared to men.
4. Location
The variation in the price of automobile insurance in Canada is due to location differences. In urban areas, it is more likely that your car gets in an accident, is involved in theft, or related mishap than rural areas where the risk of an accident is reduced due to fewer vehicles. Therefore, people living in urban areas will pay more for insurance than rural areas.
5. Vehicle
Automobile insurance mostly depends upon the type of vehicle you are using. Two factors increase variation in insurance prices or cost in Canada. Firstly, the cheaper your car, the less you pay for car insurance. Secondly, if your vehicle is expensive with built-in security options, it will likely reduce the price or give you discounts on car insurance costs.
6. Vehicle Usage
Vehicle usage is an important factor that allows issuers to look for your daily car usage. If you use your car more often for work, than the person who only uses his/her car on weekends. Then it is more likely that you are more prone to accidents. Therefore, you may have to pay more for car insurance.
7. Winter Tires
A new law introduced in Ontario is winter tires, which are responsible for reducing the price of car insurance. For the people using winter tires in snowy days will get an insurance discount.
Coverages: Defining automobile insurance in Canada
The coverages are another important factor or reason for people paying different prices of automobile insurance in Canada. The benefit of understanding coverages allows people to choose the right automobile insurance. The right coverage also helps you to save money.
On the other hand, if you are applying for more coverages, you will have to pay more.
1. Comprehensive Coverage
The comprehensive coverages include damages and loss incurred by third-party—thieves. If the damage or loss is not due to driver actions or related to the vehicle, then the comprehensive coverage protects all other damages. These damages include two types—vandalism (keying, body damage) and theft (damage due to failing tries to open the car) and environmental disasters. Several environmental occurrences such as floods and hail can cause damage to the parked car. Further, the pylon or debris can also cause damage to the car. However, the comprehensive coverage protects against all these factors that cause loss and damage to the vehicle. Plus, it protects people from financial responsibilities for recovering their cars.
2. Collision Coverage
The collision coverage reduces your headache by providing financial aid in case of accidents or collisions of the vehicle with another vehicle or object. The collision coverage compensates for the damages or loss occurred due to accidents. However, collision coverage might be expensive in insurance policies. The increased collision coverage rate depends upon the damage that differentiates due to vehicle type, driver, or other elements.
3. Liability Coverage
The liability coverage includes the protection of other people and the driver himself. The liability coverage protects others and compensates for their loss due to the driver’s responsibility for causing the accident or any other mishap. Liability insurance also aids the driver if he has harmed and lost his job due to injuries. Liability coverage also gives accident benefits in case of an accident caused by the driver himself. The liability coverage pays medical expenses, loss, including death, property damage, and injuries.
Automobile insurance companies in Canada
There is no doubt about the variation of prices in automobile insurance in Canada. However, one of the other reasons might be the companies themselves, which offer several policies with discount features and others. In this article, a short comparison of automobile insurance companies in Canada is also listed to provide you with a quick sight of how these companies differ and become a reason for variation in automobile insurance prices.
1. Allstate
Since 1953, Canada’s Allstate insurance company is working in cities such as Alberta, Quebec, Ontario, New Brunswick, and Nova Scotia. The Allstate insurance company is a member of Allstate cooperation–one of the largest insurance organizations.
The network of Allstate insurance companies is vast, including 2400 employees or agents working in 90 community-based agencies. They provide a wide range of automobile insurance products in Canada.
The conventional auto insurance policy of Allstate is something standing out. The conventional auto insurance does not restrict more mileage, protects, and provides full coverage for car damage due to accident and flexible repairing services.
2. The Co-operators
The Co-operators is the leading insurance company in Canada. The company is working from 1945 and providing a wide range of insurance products to Canadians. The Co-operators own other companies, including Co-operators General insurance company, which offers auto, home, and commercial insurance.
The Co-operators insurance company offers discounts on auto insurance depending upon the location (province) as the coverages and eligibility differ in provinces.
3. Aviva
Aviva is a UK based company since 1696. The company’s franchise in Canada is the largest working network that is working with three million people and employees up to four thousand.
Additionally, the Aviva carries a wide range of features or insurance products to give people the best insurance policies according to their desires.
The Aviva insurance company provides zero deductible, even based on your previous insurance history. The conviction protection program of Aviva that assures no increase in rates based on a simple mistake. Furthermore, their roadside assistance fee is also less. The discounts offered by Aviva insurance company on roadside assistance such as tow the vehicle, gas, rental cars, and hotel rooms in case you get stuck.
4. TD Insurance
The TD insurance company is most of the popular insurance companies among Canadians because of their direct response towards home and auto insurance. Additionally, TD insurance is one of the three top home and auto insurance groups.
The TD insurance company is providing a 25% discount on insurance premiums. However, the eligibility criteria for issuing the insurance policy stands and require the strict following.
5. RBC Insurance
The Royal Bank of Canada is a leading financial institution among Canadians. The roots of RBC links to the Merchants Bank in 1864. After a century or two, the RBC insurance was created to provide even more services to Canadians.
RBC insurance branch is providing services to four million users in Canada. Plus, they are providing discounts on a variety of insurance products. And they offer reduced, affordable coverages for automobiles, with low deductibles for qualified cars.
6. The Personal
The personal insurance company was founded in 1964 and has specialization in-home and Auto insurance. They are providing their services to combined partners and offer exclusive rates group.
The personal multi-car insurance in Canada allows its user to customize the coverages and benefit from innovative programs. They provide online services for claiming your auto file within 10 minutes. Plus, their agents help customers and solve their queries in a friendly environment.
7. Desjardins.
Desjardins General insurance is one of the top three largest P&C insurers in Canada. This Insurance has two subsidiaries. However, they are providing services in provinces such as Ontario, Quebec, and Alberta.
The Desjardins provides discounts on auto insurance in three ways: multi-line discount, multi-vehicle discount, and winter tires savings. Plus, this car insurance policy allows users to choose coverages depending on their needs.
8. Economical
The economical insurance is a Canadian property insurance company founded in 1871.
The economical insurance provides the best insurance policies for automobiles, even if the driving history is not up to the mark. They also offer discounts on Auto insurance. The deals include the reduction in price on the driving experience and safety features. Plus, they provide discounts on bundling the insurance policies together, such as car and home insurance. The economical insurance company is famous for its insurance policies for automobile, home and property insurance, liability, and agriculture.
9. Travelers
The basis of Travelers insurance company links to the Canada General Insurance Company back in 1887. the company is working with a large working network around 1700 employees that aim to provide services, especially insurance solutions to customers all around Canada.
The Travelers are also prominent in car insurance policies that provide coverages, including and uninsured motorists, playability, and benefits in accidents. Furthermore, they cover a wide range of automobiles, from cars to trucks and vice versa.
10. Wawanesa
In 1896, the Wawanesa gained popularity in property businesses and started providing insurance policies to their best. They started auto insurance in 1928. And become the most popular and largest issuers of automobile insurance.
The Wawanesa provides customized policies that can fit with each policyholder. Every driver possesses different traits and requires other approaches per their need. The Wawanesa, therefore, offers different policies for drivers. They also provide a wide range of discounts, including the anti-theft, experienced driver, multi-product and vehicle, loyalty, and others.
Automobile Insurance: Expensive in Canada
According to several reports compiled in 2020 shows a drastic increase in the prices of automobile insurance in Canada. The rise in the cost of Auto insurance depends on several factors, as discussed earlier. However, the government or private insurance companies have some changes, leading to the increase of prices in Canada.
Reasons for increasing rates of car insurance
1. Government laws
The government mandates automobile insurance, and each driver has to apply for coverages with no limitations such as liability and comprehensive coverages.
Moreover, the laws identified by the government are also mandatory for private insurance companies to adapt. Therefore this change can increase the car insurance price.
2. Increase in collisions
According to statics, the liability insurance claims amounted to approximately 3.56 billion Canadian dollars showing a high crashes increase. The number of vehicles is increasing day by day, and the risk of more collisions also increases.
These increasing collisions are not only the reason for increasing the prices of automobile insurance. The other factor is the repairing of high-cost car parts that get damaged after the crash or accident.
The backup cameras and sensors which cost thousands of dollars get damaged during the accidents and require more repairing cost leading to high Auto insurance rates.
3. Increase in theft or vandalism
However, in Canada’s rural areas, the rate of automobile insurance is considerably less than the urban parts. The rise in vehicle theft has been raised in rural areas leading to a considerable problem for both people and insurers. Therefore, theft or vandalism is another reason for the increase in the price of automobile insurance.
4. Weather conditions
In recent years Canada is facing storms and floods, particularly in Alberta. These weather conditions or calamities require repairing vehicles damaged due to water. Moreover, water damage is even the hardest that insurers had to ask customers to pay more for automobile insurance.
Cheaper Car insurance
Despite the increase in the prices of automobile insurance in Canada, there are several ways through which you can get cheaper car insurance.
Coverages
One way to have cheap car insurance is to select specific coverages and only pay for them. However, the two coverages that are comprehensive coverage and liability is mandatory by the government. Therefore you can drop for other coverages such as collisional if your car does not cost much.
Quote and price
The prices of auto car insurance vary from province to province, and due to high competition among insurance companies, lefts a room for you to compare and negotiate for coat and prices. But, if you belong to Manitoba and BC, this will not work for you.
Car
As mentioned earlier, the automobile insurance price depends upon the vehicle itself. Therefore if the car has more safety features, has high crash test scores, and less engine capacity reduces the insurance price. If the vehicle can easily be stolen will increase the automobile insurance rate.
Bundle insurance
Leading insurance companies reduce automobile insurance price if bundled with other insurance such as home or business insurance. This will allow you to have better car insurance rates.
Conclusion
Depending upon drivers’ specific needs and their demographic variation leads to the differentiation in the prices of automobile insurance. The factors play a significant role in identifying the cost of automobile insurance. Also, the rate of car insurance in Canada varies from province to province. Thus, these aspects are considered to be the reasons why people paid different prices for automobile insurance. Furthermore, the drastic increase in automobile insurance prices in Canada can be tackled by adopting different ways.
FAQ
1. What is the average car insurance rate in Canada?
The rate of car insurance depends on the province you live in; however, the average price of automobile insurance in Canada is around 125 Dollars to 158 Dollars.
2. Which province in Canada pays more rate for car insurance?
According to Canada’s insurance bureau, the B.C residents pay more for car insurance with an average of 1,832 Dollars annually.
3. Why my car insurance rates increase without experiencing an accident?
If you are a high-risk driver with tickets, it is more likely that the insurance company will ask you to pay more because people with bad driving history claim more.
4. Can Allstate cover throughout Canada?
Yes, most of the provinces of Canada are covered by the Allstate insurance company.
5. Am I able to insure a car that does not belong to me?
Yes, there is a possibility to insure a car that does not belong to you, but it may be difficult for you to be a primary policyholder and even more if you do not live with the real owner.
References
https://www.greedyrates.ca/blog/best-car-insurance-companies-canada/
https://www.insurancehotline.com/resources/car-insurance-in-ontario-whats-happening-with-rates/
https://toronto.ctvnews.ca/ontario-drivers-overpaying-for-car-insurance-report-says-1.4811623
https://www.humberviewgroup.com/guide/car-insurance-in-ontario/
https://www.ratehub.ca/blog/why-is-car-insurance-in-toronto-so-expensive/