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How does car insurance work in Ontario?

Despite what some people say, Ontario car insurance can be simple.

Car insurance helps ensure that you, your vehicle, and your passengers are protected financially and from liability in the event something happens involving your vehicle, such as a collision. Car owners in Ontario are required by law to have car insurance.

Ontario operates under a no-fault insurance system, which means drivers always go through their own insurance company, no matter who is at fault in an accident. In Ontario, auto insurance is regulated by the Financial Services Regulatory Authority of Ontario (FSRA), formerly known as the Financial Services Commission of Ontario (FSCO), an agency of the Ministry of Finance.

Ontario auto insurance is a privatized industry, meaning you purchase your policy from a private company. When providing a quote, insurance companies will consider your driving record, personal information, vehicle details, and plenty more before giving you a price. This makes the market competitive, which is why Ontario drivers are encouraged to compare quotes from multiple providers.

Last year, Ontario drivers who used RATESDOTCA paid 30% less than the average market rate. Compare rates from over 50 of Canada’s best insurance providers side by side. All you have to do is choose the best one.

Mandatory and optional auto insurance in Ontario

These four mandatory components are included in a standard Ontario auto insurance policy:

  1. Third-Party Liability
  2. Direct Compensation-Property Damage (DC-PD)
  3. Uninsured Automobile Insurance
  4. Accident Benefits

Ontario drivers can purchase extra (optional) insurance, including collision coverage, comprehensive coverage, specified perils coverage, and all-perils coverage.

Mandatory and optional auto insurance in Ontario

Insurance type Mandatory coverage Optional/Additional coverage
Third-Party Liability $200,000 minimum. Provides coverage in the event of a lawsuit resulting from an accident where you are at fault. Coverage can be increased to $500,000, $1 million, or $2 million, with up to $2 million limit.
Direct Compensation-Property Damage (DC-PD) Covers damage to your car, or loss of use of your vehicle, if someone else is at fault. Must involve another insured vehicle. For additional vehicle coverage including for when you are at-fault, consider collision coverage.
Uninsured Automobile Insurance Provides up to $200,000 in coverage if you are injured or killed by an uninsured driver, or if your vehicle is damaged as a result of a hit-and-run by an unidentified, uninsured motorist. Family Protection Coverage is an optional coverage that includes additional coverage of up to $1 million in the case of a hit-and-run by an uninsured motorist.
Statutory Accident Benefits Provides coverage if you are injured in an accident, regardless of who is at fault. Covers medical expenses that aren’t covered by OHIP. Coverage limits can be increased.
Collision Coverage (Also Upset Coverage) Optional Covers the costs of repairing or replacing your vehicle following a collision with another vehicle, an object, or property.
Comprehensive Coverage Optional Covers damages caused by named perils identified under the Specified Perils coverage, as well as losses from other perils like falling or flying objects, theft, fire, hail, windstorms, missiles, and vandalism.
Specified Perils Coverage Optional Covers damages caused by named perils such as theft, attempted theft, explosions, natural disasters like fire, lightning, windstorm, hail, rising water, earthquakes, and also other perils specified in your policy. Specified perils do not cover damages due to vandalism, breakage of glass, etc.
All-Perils Coverage Optional Combines collision/upset and comprehensive coverage. Also provides additional protection if a household member or an employee steals your vehicle.

Frequently asked questions about car insurance in Ontario

Why should Ontario drivers compare rates?

Although all insurance companies use the same information to determine your quote, they evaluate your risk differently. This means they all offer different prices for broadly the same coverage. As a result, provincial regulators recommend getting multiple quotes before you purchase a policy. It is the easiest way to ensure you get the best rate available.

Ontario Car insurance rates change up to four times per year. By shopping around, you can check to see if your current insurance provider is still the one that offers you the best rates. If not, it might be time to switch to a company that offers a better price.

Which city in Ontario has the cheapest car insurance?

On average, rural areas are less busy and have fewer motor accidents, which means drivers in these regions pay less than city dwellers. In Ontario, drivers in Toronto and Brampton face some of the highest insurance rates, while drivers outside of the GTA typically pay less.

However, the number of claims in your neighbourhood, the number of vehicle thefts, and the incidences of insurance fraud in your local area also come into play. This is why premiums not only vary by city, but by postal code as well.

Which car has the cheapest insurance in Ontario?

The make and model of the vehicle you drive has a big impact on your rates. There are two major things insurance companies consider when it comes to your car: the vehicle’s safety rating, and the likelihood of it being stolen.

We took a look at some of the best-selling cars in Canada and compared quotes for an average 35-year-old driver without any convictions or tickets in ten cities across Ontario, including Ottawa and Toronto. We averaged the rates and found the cheapest vehicles to insure are the Dodge RAM 1500 and the Chevrolet Silverado, while the most expensive vehicle to insure is the popular Honda Civic.

RAM pickup trucks and the Chevrolet Silverado are among the safest vehicles on the road, according to the Insurance Institute for Highway Safety, which helps keep their rates low. The Honda Civic is one of the most stolen vehicles in Canada, which is part of the reason it is more expensive to insure.

What factors affect car insurance premiums in Ontario?

Here are some of the key factors that influence your Ontario auto insurance premium:

  • The car you drive: The make, model and the age of your vehicle will affect your premiums. Brand new cars, luxury cars and sports cars typically cost more to insure due to the cost of replacing and repairing parts.
  • Usage of the car: Your commute time, the average kilometers you drive in a day, and whether you use your vehicle for business or pleasure will affect your rates.
  • Your driving record: Tickets, accidents, or convictions on your record will lead to higher premiums.
  • Your postal code: Where you live in Ontario affects your rates. On average, city-based drivers pay more, due to the high number of claims reported in urban areas, and the increased likelihood of getting in an accident.
  • Additional coverages: If you add any optional coverages to your policy, your premiums will increase to account for this extra protection.
  • Discounts and benefits: Many insurance companies provide discounts for winter tires, bundling insurance products, insuring two or more cars under the same company, being part of a professional association, and so much more. Eligible discounts will lower your premiums.

What does Statutory Accident Benefits cover?

Statutory Accident Benefits provides coverage if you are injured in an automobile accident, regardless of who is at fault. This helps cover the costs of medical expenses including physiotherapy and rehabilitation costs that aren’t covered by OHIP. This coverage is mandatory in Ontario and included in a standard auto insurance policy.

Here is a more detailed breakdown of what statutory accident benefits cover:

  • Income Replacement Benefits: Weekly replacement of 70% of your gross income up to $400 per week.
  • Medical, Rehabilitation and Attendant Care Benefits: Up to $65,000 for serious injuries like sprains and broken bones, and $1 million for catastrophic injuries like loss of limb, paralysis, etc.
  • Caregiver Benefits: Up to $250 per week for the first dependant, and $50 per week for each additional dependant, for catastrophic injuries.
  • Housekeeping and Home Maintenance Expenses: Maximum of up to $100 payout per week in the case of a catastrophic injury.
  • Death and Funeral Benefits: Up to $25,000 payout to the spouse, $10,000 for each of the dependents, and a maximum of $6,000 in funeral costs.

There is additional protection that is available for you to purchase on top of the minimum Statutory Accident Benefits included in a basic policy. This includes:

  • Income Replacement Benefits: Can be extended to $600, $800, or $1000 per week.
  • Medical, Rehabilitation and Attendant Care Benefits: Can be increased up to $1 million for serious injuries, and $2 million for catastrophic injuries.
  • Caregiver Benefits Expenses: Can be increased to apply to any kind of injuries, not just catastrophic ones.
  • Housekeeping and Home Maintenance Expenses: Can be increased to apply to any kind of injuries, not just catastrophic ones.
  • Death and Funeral Benefits: Can be increased to $50,000 to the spouse, $20,000 to each dependant, $8,000 for funeral costs.

How much does car insurance cost in Ontario?

According to the Insurance Bureau of Canada, Ontario drivers pay an average of $1,505 annually for car insurance, or $125 each month. While the province no longer holds the title of most expensive auto insurance in the country (that award now goes to British Columbia), Ontario drivers still face rates higher than the majority of Canadians. See a cost comparison chart of provinces here.

Why do Ontario car insurance rates change so much?

Insurers in Ontario cannot increase their rates whenever they please. They must apply to the Financial Services Regulatory Authority of Ontario (FSRA) on a quarterly basis if they want to increase (or decrease) their rates. FSRA releases a list of these insurance companies and the approved rate changes on a quarterly basis.

See a table of recent Ontario auto insurance rate changes here.

Why are car insurance rates in Ontario going up?

Ontario has seen consistent insurance rate increases over the years. FSRA notes that insurance companies have reported an increase in claims costs for vehicle repairs, which may contribute to the hikes. Distracted driving due to cell phone use is another ongoing problem. It has increased the number of accidents on Ontario’s roads, thus increasing the number of claims insurers have to pay out. FSRA reports that Accident Benefits and Third-Party Liability coverages account for more than half of all auto insurance claims.

See a table of recent Ontario auto insurance rate changes here.

How to get the cheapest car insurance in Ontario

Maintaining a safe and conviction-free driving record is without a doubt the best way to keep your premiums down, but there are plenty of other ways to save as well.

  1. Compare quotes: Of course, the easiest way to save money is to compare auto insurance quotes on RATESDOTCA! If you’re looking to buy a new car, compare quotes for the vehicles you’re considering to see which one is cheapest to insure.
  2. Bundle home and auto insurance: If you bundle your home and auto insurance under the same insurance company, you can save 5 to 15% off both policies. This is also called a multi-line discount.
  3. Change into winter tires: Ontario roads face some harsh winter conditions. Save 5% on your car insurance by installing winter tires for the season. Protect your wallet and keep you and your family safe on icy roads.
  4. Know what coverage you need: If you have an older vehicle that wouldn’t cost much to replace, paying extra for collision coverage or comprehensive coverage might be a waste of your money. Review your coverage each year and cancel any add-ons you no longer need.
  5. Pay annually: If you can pay your premiums annually rather than monthly, you can often save a bit of money. Some insurance companies offer a discount on the payment of annual premiums upfront.
  6. Drive less: The less you drive, the more you save. If you commute to work via car, switching to transit can slash your premiums. If you don’t drive as much as you used to, call your insurance company and let them know.
  7. Drivers education: Most insurance companies offer discounts for new drivers who complete driver training from a Ministry of Transportation accredited driving school. A defensive driving course can also make you eligible for discounts.
  8. Multi-vehicle discounts: Like multi-product discounts, you can insure more than one vehicle under the same insurance company to snag a 5 to 15% discount on your premiums.
  9. Group discounts; If you are part of a professional association, union, or non-profit association, you may be eligible for group discounts.
  10. Safety features: Installing approved anti-theft devices or safety features on your car can lead to discounts. Check device eligibility before you purchase and install it.

Average car insurance rates by province

Here is a comparison chart of annual premiums by province:

Average car insurance rate by province

Province or Territory Average Premium 2018 Average Premium 2019 Average provincial premium increase
Alberta $1,251 $1,316 5.2%
British
Columbia
$1,680 $1,832 9.05%
Manitoba $1,080 $1,080** N/A
New
Brunswick
$819 $867 5.85%
Newfoundland
& Labrador
$1,132 $1,168 3.18%
Northwest
Territories
$978 N/A N/A
Nova
Scotia
$842 $891 5.82%
Nunavut $963 N/A N/A
Ontario $1,445 $1,505 4.15%
Prince
Edward Island
$796 $816 2.51%
Quebec $661** $717 8.47%
Saskatchewan $936** $1,235 31.94%
Yukon
Territories
$812 N/A N/A

** 2019 data not yet available

Average insurance premium numbers are according to data released by the Insurance Bureau of Canada in July 2018 and August 2019.

Average Ontario car insurance rate increases

This table outlines quarterly average rate increases over the last three years, as reported by FSRA:

Average Ontario car insurance rate increases

Quarter and Year Approved Average Rate Change (%)
Q4 2019 1.56%
Q3 2019 2.60%
Q2 2019 1.99%
Q1 2019 2.70%
Q4 2018 3.35%
Q3 2018 2.06%
Q2 2018 1.11%
Q1 2018 2.23%
Q4 2017 1.03%
Average Ontario car insurance rate increases
Q4 2019 average rate increase
+1.56%
Biggest rate increase
+3.35%
Biggest rate decrease
N/A
Find the best Ontario car insurance on RATESDOTCA

Back in the day, comparing quotes was a time-consuming chore that involved calling individual companies, and reciting your information over and over again. Thankfully things have changed since then.

Technology has made comparing insurance companies much easier. RATESDOTCA runs the information you provide against a database of quotes provided by insurance providers. This allows you to easily compare quotes side-by-side, from more than 50 car insurance companies in Ontario.

Our service is free and last year, Ontario drivers who used RATESDOTCA paid 30% less than the average market rate.*

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*Based on the difference between the average lowest auto insurance premium and overall average auto insurance premium from our site in 2019.

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