Car Insurance = Expensive

Why Is Car Insurance So Expensive?

Canadians pay some of the highest car insurance rates in the world, that is a fact, but what makes car insurance expensive? Well, it’s a combination of factors.

Too Much Insurance Coverage

We found that most of our customers are unaware of just how much they are covered for, particularly under the Accident Benefits coverage on their policy.  Whether it’s Income Replacement, Medical Rehab, Attendant Care or any of the other accident benefits, Canadians and especially Ontarians, are generally very well covered in the event they are injured in an auto accident.  Fortunately, most people don’t ever end up needing this coverage.  For those who do need the coverage, claims can run into the 10’s and even 100’s of thousands of dollars for one accident.  There’s a lot of money involved and it’s for this reason that those looking to take advantage of the system find auto insurance an attractive target for abuse.  Which leads me to the next reason car insurance is so expensive….

Car Insurance Fraud

The Ontario Insurance Anti-Fraud Task Force has estimated that auto insurance fraud in Ontario ranges from $800 million to $1.6 billion dollars annually.  These costs are being covered by the premiums that you and I pay.  It’s one of the reasons why many people are calling for regulation of the towing industry and health care practitioners, as well as a crack down on organized fraud rings.

Insurance Lawsuits

One of our KTX offices happens to be located in Hamilton, ON.  As I drive into the office and exit the 403 onto Main St., the first thing I see each morning is a collage of billboards for personal injury lawyers.  Now, these lawyers offer some very important and needed services, but it’s important to remember that each time someone is sued for a car accident the costs are ultimately covered by the premiums we all pay for insurance.  As the frequency of auto insurance lawsuits increases, your insurance costs will as well.

The Area You Live In

The more people who live in your area, the more cars are on the road, the more accidents that occur.  Some of the most expensive car insurance rates are in the most densely populated areas such Toronto and the GTA, Hamilton, etc.  As a general rule of thumb the more rural the area you live in, the less you’ll pay for car insurance.

Young Drivers And New Drivers

Young drivers’ insurance rates are usually some of the highest; anyone who owned a car when young knows this to be true.  Quite often you’ll hear about the rates a young male pays for car insurance and it will cost more than what they paid for the actual car.  Same thing rings true for new driver insurance rates. Whether you’re 16 and getting your G2 licence, or you’re 40-years-old and new to Canada, your driving skills are unproven in the eyes of insurers and it takes time, sometimes years, to prove you’re a safe driver.  Fortunately there is hope on the horizon for young and new drivers alike who drive well: Usage Based Insurance is on the horizon and will revolutionize how people shop for car insurance quotes.  Stay tuned….

High Risk Auto Insurance

Maybe you’ve had a ticket or two.  Maybe you hit some black ice and had an at-fault accident.  Perhaps you missed a payment or two while times were tough.  If one or more of these things have occurred, you might find yourself in a high risk or “non-standard” insurance category.  Typically this limits the number of insurers who will sell you insurance which increases the price you pay.  The key is to check with all high risk insurers for the best car insurance rate.

Ways To Decrease Auto Insurance Premiums

If you find yourself paying too much for auto insurance what can you do?  Well, there are many things you can do including driver’s training or removing unnecessary coverage, but the single most important thing you can do is compare rates to make sure you’re getting the best possible rate in the market.  Get a car insurance quote today at ktxinsurancebrokers.cato see if you could be saving money on your car insurance rates.


Sean Graham

Sean Graham

Sean has been an Insurance Industry professional for the past 15 years after receiving his education from Mohawk College's Insurance Program.

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