News & Resources

The Hidden Costs of Sticking With the Same Car Insurer

Hundreds of thousands of Ontario drivers saved over $700 on their car insurance last year by switching providers. How much is your complacency costing you?

April 27, 2021
6 mins
A man and woman look very upset and overwhelmed while speaking with someone about a document

Getting complacent about your car insurance is easy, especially when shopping around hardly feels worth the hassle. The results of a Leger survey conducted in March 2021 on behalf of RATESDOTCA, however, show enough potential savings to be well worth your while.

Ontario drivers are less likely to shop around for car or home insurance than for other common expenses such as cellphone plans or internet services. Less than one in four Ontario residents shopped around for car (23%) or home (22%) insurance last year, the survey found, compared to nearly one in three that shopped around for internet. However, the higher proportion of all respondents that switched after shopping around for car insurance versus every other category shows there is value in assessing your options.

% Who Shopped Around % Who Switched after shopping around
Car Insurance 23 39
Home Insurance 22 34
Cellphone 31 32
Internet 32 37

Women were even less likely to shop around for insurance products last year, the survey found.

% of Men Shopping Around % of Women shopping around
Car Insurance 29 18
Home Insurance 25 18

Loyalty discounts lag the savings from switching

While slightly more than one in three respondents with car insurance (35%) said their current provider gives them a loyalty discount, 5% is typically all the savings those discounts entail. According to the Financial Services Regulatory Authority of Ontario (FSRA), which regulates car insurance in the province, the average annual car insurance premium in Ontario is $1,664, meaning a 5% discount would equate to $83.20 per year or $6.93 per month.

Compare that with the 78% of survey respondents who switched for a better price, as 36% of them saved at least $60 per month (nearly 10 times the average value of a loyalty discount).

ComplacencyInfographic

Consider some basic math for perspective: There are 8.7 million cars in Ontario. Assuming the drivers of 23% of those cars shopped around for car insurance last year and 39% of those people switched, that is 780,390 people in Ontario that switched car insurance providers last year. If 78% of them switched for a better price and 36% of those people saved at least $60 per month, that means 219,134 people in Ontario saved over $700 on their annual car insurance premiums last year simply by switching providers.

Put another way: that is the entire population of Windsor saving more than the average Canadian family of three spends on groceries for an entire month (which Statistics Canada pegs at $642*). For those still feeling complacent: that is enough money to buy a new iPad or enough gas to drive from Vancouver to Halifax!

% Who Saved less than $40 or less % Who Saved $40/month or more
Car Insurance 38 56 (including 36% who saved at least $60 per month!)
Home Insurance 52 35
Cell Phone 62 37
Internet 52 47

More than one million Ontario drivers are unaware of the opportunity

Now consider the reverse perspective: 77% of Ontario drivers, representing about 6.7 million cars, did not shop around for car insurance last year. Of them, more than one in five said their reason for not shopping around was simply because it was either “too much hassle” (15%) or the idea simply “never occurred” to them (6%).

That suggests more than 1.4 million Ontario drivers (21% of 6.7 million) are staying with their existing auto insurance provider not because they are happy with the service or even the price, but because of complacency.

Another 9% of Ontario drivers who did not shop around stayed with their existing provider because of a loyalty discount. That equates to more than 600,000 people who think they are getting the best possible deal, even though the data suggests they could be saving nearly 10 times more.

As for those drivers that switched car insurance providers last year, price represented by far the most common reason for switching, though 11% of drivers who switched said they did so because of a change in personal circumstances.

That equates to roughly 85,843 people, which might seem like a large figure until you start to think about how many people in Ontario have experienced a change in personal circumstances over the past year (such as, say, working from home?) but have *not* shopped around, much less actually switch. Given the recent rise in popularity of new products such as usage-based insurance, drivers who commute less (or perhaps not at all?) stand to reap substantial savings.

Millions of Ontario drivers have experienced a change in circumstances over the course of the COVID-19 pandemic, yet this survey confirms many of them remain oblivious to the savings opportunities that change represents.

Tips for kicking your complacency

  • Pay less if you’re driving less: Usage-based insurance policies are fairly new, but have rapidly gained popularity as commutes have fallen amid the COVID-19 pandemic. For example: CAA’s MyPace product, a usage-based policy that charges its premiums based on 1,000km increments, saw a 300% increase in adoption between April and December 2020 versus the same period in 2019.
  • Shop around: Drivers using RATESDOTCA to compare auto policies save an average of $676** in annual premiums when switching providers.
  • Check for any pandemic-related discounts: many providers are offering COVID-19 rebates for their customers.

About the survey

An online survey of 1,000 Ontario residents was conducted by Leger  between March 19 and 21, 2021 using Leger’s online panel. No margin of error can be associated with a non-probability sample (i.e. a web panel in this case). For comparative purposes, though, a probability sample of 1,000 respondents would have a margin of error of +/- 3.1%, 19 times out of 20.

*According to Canada’s Food Price Report 2021

** Shoppers in Ontario who obtained a quote on RATESDOTCA and transacted via our contact centre from August to December 2020 saved an average amount of $676. The average savings amount represents the difference between the shoppers' average lowest quoted premium and the average of the second and third lowest quoted premiums generated by RATESDOTCA.

Jameson Berkow

Jameson Berkow is the Managing Editor of RATESDOTCA, responsible for ensuring our content stays focused on helping Canadians make better money decisions. An experienced reporter, editor and broadcaster, Jameson has held senior roles with the Financial Post, BNN Bloomberg and The Globe and Mail. Read more about Jameson on his LinkedIn profile.

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