Surprising absolutely nobody, Ontario car insurance rates continue their steady uphill climb with little reprieve in sight. What goes up must come down, right? Matt Hands, vice president of insurance at Ratehub, laughs.
“At this point, the industry is hoping to find ways to curb increases,” he says. I insist our insurance costs will never go down. He doesn’t argue. The goal is to slow how fast they’re going up. Ratehub’s recently released study shows Toronto is once again king of car insurance costs, with average annual premium of a sample driver with a clean driving record at $2,044. Brampton is close behind at $1,957, Markham at $1,730 followed by Mississauga and Vaughan, both at $1,588.
Perhaps even more stunning is what GTA drivers on average pay, according to the Financial Services Regulatory Authority (FSRA): $2,543 per year. Those Ratehub numbers were for an unblemished driving record; that FSRA average is for everybody. That puts GTA drivers about 32% higher than the rest of the province.
Why are car insurance rates on the rise?
Hands explains that the rising cost of auto theft remains a disproportionate part of your premium, but that population diversity is also a growing issue. “Immigration tends to draw younger, less experienced drivers to our core cities,” he explains. Younger, less experienced drivers have always traditionally paid higher premiums, but with more of them in the pool, costs continue to rise. Driver history consideration varies from carrier to carrier, and some drivers with experience from a different country may be expedited through the licencing and insurance profile process.
Traffic congestion is painful to drive in, but it’s also another key component of those higher rates, according to Hands. More drivers, more crashes. He also points to increasingly creative fraud: selling fake insurance, staged crashes and exaggerated claims as a key driver of rates. It’s all the things we know (and a few new ones), and they’re getting worse.
Hands relayed a timely message from a recent Insurance Bureau Association of Ontario meeting. The CAO of CAA – another insurance entity wrestling with sky-high theft payouts – wondered why more manufacturers aren’t providing two-factor authentication systems to prevent theft. Why aren’t they? They could. They should. They’re not.
As reported here a few weeks back, “[a]uto theft claims in Canada fell slightly in the first half of 2024, but overall, the number and value of claims continues to stay well above historic levels.” The headlines about more and more arrests for auto theft are true, but historically, any changes in patterns of risk can take years to filter through to a place where they impact rates. Well, at least to make them go down. Pattern changes that increase rates seem to happen with blazing speed.
Other changes in the automotive market
Readers should be aware of another change happening in the market right now. During the pandemic, vehicle shortages – both new and used – drove the prices of those vehicles to record highs. Used cars were selling in some cases for more than they cost when new. If you had a car stolen or written off in the previous few years, you probably received a higher settlement for it than you would have at any other time. It was an upside-down world, when cars magically appreciated.
The same way consumers shopping for a vehicle in those years found the prices to be ridiculous, those settling claims realized they could argue for higher offers from their insurance companies. A car that is written off is considered at current market value. A few minutes on the internet offered up many comparable vehicles at those pandemic-shortage prices. While some insurance companies were on it early on, it didn’t take long for many drivers to push for – and get – higher valuations.
For a Whitby woman, however, an ongoing negotiation for fair compensation for her stolen truck has been a nearly three-month long nightmare. It’s also a good example of things that drivers need to consider regarding their insurance.
A 2010 Dodge RAM 2500 SLT Cummins Diesel was liberated from a driveway last August. The thieves actually drove the truck around the driveway to hook it up to a trailer loaded with a boat, and hauled away that, as well. The owners had left the day before on vacation, and neighbours understandably thought that’s why the vehicle and boat were missing.
For the boat, that was insured by Aviva, the process went smoothly. The truck, insured with Definity was another story. When an insurance company is preparing its offer for settlement, it, or its third party agent, pull comparisons to establish a fair value. This is where the problems began for the Whitby reader.
The third-party agent assembled comps that were not reflective of the truck in question. One was a California truck represented in miles and US dollars; another was from an auction site in Quebec; yet another was not roadworthy and being sold ‘as-is’; another was not a diesel. Here’s the warning for consumers: the only way this was found out was because the woman chased down every example – the agency had provided no links to the offered comps. A little detective work revealed the origin of the comps, with weren’t truly comparable at all.
Getting a fair settlement offer
An original settlement offer of $19,990 (after deductible) was proposed [Driving.ca has verified all documentation involved]. The truck’s owner was surprised, as they believed the truck was worth closer to $35,000. Here’s where the lessons for others begin.
- If you’ve made improvements to your vehicle – in this case, a fifth wheel, heavy-duty trailer hitches and things like tonneau covers – you will need receipts to prove these, and preferably photos. Anything that speaks to the condition of your vehicle is important
- Do not store these documents in the glove box of the vehicle, or at least keep a copy in another place
- Depending on the insurance company, the day they make you an offer (whether you accept it or not) is when your rental vehicle goes back
It was only when this owner realized the comps offered were, well, not comparable, that the negotiation got sticky. They contacted their broker for help, and that broker requested new comps. They got two; one was not a diesel. The insurance company tossed in another $500. The truck owner escalated their request. It was reasonable. They requested comps of vehicles that “were in roadworthy condition, similar to our truck’s state. Matching key specifications such as bed size and other relevant features. Transparent sources for each comparable, including links for verification.”
After nearly three months of chasing down a more fair assessment, the truck’s owner was finally offered $31,200 as a settlement – less their deductible. They found their own comps (as did I when I did a quick search). They’ve been without a rental since the first offer was made five weeks ago. It took a lot of time and stress to approach a fair settlement.
Matt Hands encourages consumers to pay attention when securing a policy to make sure they have comprehensive coverage – that includes theft. Consider loss of use – that rental car you’ll need. It doesn’t kick in for 48 hours after you’ve lost your vehicle, and it has a limited time, usually 14 to 21 days. You may not have a car yet, but you won’t have a rental, either. He says to look at non-owned auto coverage, which extends your coverage to a vehicles that aren’t yours, like a rental when you travel. On a new car, he highly recommends guaranteed replacement protection; the length varies (usually between two to five years), but it ensures you will be able to adequately replace your stolen/destroyed vehicle. We’re paying record rates; make sure you get a fair deal.
Important: before you buy any vehicle, check if your carrier has attached a surcharge to it and/or requires you to purchase an aftermarket anti-theft device. The list is updated weekly, but here’s a snapshot of who was charging what from August.
Final note: a Reddit post from years ago is a goldmine of information for anyone making an insurance claim. It’s about household items, but the lesson holds for your vehicle, as well. Search “I used to be the guy who worked for insurance companies.”