stumbled across this post searching for something else and figured as an insurance broker in Ontario I would like to weigh in as the post is filled with misconceptions.
I often hear many false statements from clients regarding Ontario insurance the 2 most common statements are;
1. Ontario has the highest rates in Canada, Government run insurance is way cheaper look at BC.,
2. Insurance companies charge what they want when they want
1. this is probably the second most false statement I hear. BC which is government run has the highest rates of insurance in the country since 2007 ( http://www.citytv.com/toronto/cityne...n-canada-study
) and this is still true today.
The entire statement is false because people are not comparing apples to apples and usually stated by people that have no knowledge of actually insurance costs coast to coast. It’s often someone that heard from a friend of a friend that has an uncle ….etc…. that was talking to a guy and they pay X$ for insurance.
Ontario automobile insurance is very high but you also have to consider Ontario has the richest insurance plan in the Country. There is no other province that offers the limits Ontario offers i.e. $1,000,000 worth of personal Accident benefits, coverage for caregiver support, death and funeral benefits, rehab and 3rd party liability also higher then any other province, income replacement if injured in a car accident.
In BC there is no coverage for personal accident benefits the coverage must be purchased separately
The coverage for 3rd liability is a maximum of $200,000 vs. the norm of $1,000,000 up to $5,000,000 in Ontario.
BC does not offer physical damage cover for the car itself this must be purchased by a 3rd as additional coverage and limits are set it must be purchased through a 3rd party
There is no cover for income replacement in the event you are unable to work due to a car accident.
In BC you must prove your injuries so things like whiplash and soreness is rarely covered in addition the limit is set on what they will pay out i.e a broken leg cost x, arm cost x,
2. This statement is 100% false and probably the one that bothers me the most just because a company suffers a financial loss they can not just take a rate increase to make up for it, it’s the cost of doing business. The companies get rates approved by going to the government and proving that in city X they insured X number of people and had X number of claims which resulted in a loss of X. Every single insurance company in Ontario MUST file their rate and any increases with the Government through the Financial Service Commission of Ontario (FSCO) and all of the rates are public knowledge and can be viewed on line at http://fsco.ca/english/insurance/auto/rates/default.asp
The problem why we have such high rates is a direct reflection of what I mentioned in #1. If the companies are putting up so much cover of course they are paying out more in claims, and this is what affects the price of insurance. I.E the average claim in Ontario is approx $2,000, given that the average cost to insure 1 car in Ontario is $1300 there is a $700 short fall so the insurance companies will then need to use a portion of everyone’s insurance to make up the loss thus causing an increase. Having such high insurance limits becomes a real issue when you have lawyers involved that know how to get every cent (if not more) out of the system.
As an example from a recent settlement a young female was injured in an accident after the driver ran a stop sign and the court awarded $18.4 million to the family (policy only had 1 million cover), there is no way in the world the family will ever in 10 life times pay that much back to any insurance company. Even worse is that they were insured a small mutual company called Wawanesa that writes 1.9 million a year in premium (before claims) http://www.wawanesa.com/CN/EN/about-company.html
, so it will take them approx 20 years to just break even from this 1 claim. The outcome is that as an insurance pool each and everyone of us will suffer rate increases to pickup a downfall like this.
As I stated above Ontario does have very high but we have to compare cover to cover and when you have claims as above occurring more frequently take it makes it very tough for the industry to reduce the cost of insurance. Over the past few years insurance companies have been trying to get laws pass that will allow them to reduce coverage making it more in line with the rest of the country but special interest groups have been defeating every bill submitted.