Every vehicle in Ontario needs to be insured by law. This insurance policy provides coverage to all of the drivers of that vehicle, ensuring that the vehicle and its occupants have the proper protection in the event of an accident or injury.
In Ontario, every insurer must use the same government-approved standard insurance policy wording: which means that while deductibles, coverage limits and policy add-ons can be customized to meet your specific needs, the wording outlining how claims are settled is the same and every policy must meet the same minimum coverage standards. This makes it relatively easy to compare insurance rates from city to city and determine which city has the cheapest car insurance in Ontario.
How are Ontario car insurance rates calculated?
To better understand why there are different car insurance rates on a city-by-city basis, we should start by exploring how car insurance rates are calculated.
There are five main components that determine the cost of a car insurance policy in Ontario:
The age, make and model of your car is one of the largest factors when determining your car insurance premium in Ontario. Newer and more expensive vehicles generally cost more to repair or replace. Also, cars that have an array of sensors and computer-aided features may be safer to drive, but they are also much more expensive to repair, even if they are damaged in a relatively minor fender-bender. As cars get older, parts may become more scarce, driving up the price to repair a 15-year old vehicle close to what a newer, more expensive car may cost. In addition, older cars tend to have fewer safety features, which can result in higher accident benefit claims. Therefore, older vehicles may be more expensive for this portion of the premium.
Your driving history
Ontario car insurance rates are strongly related to an individual’s driving history. Cars driven by experienced drivers with a positive driving record will always pay less than those who are less experienced or who have a checkered driving history. There are four main factors that can affect a person’s insurance rate:
Tickets/accidents – Decades of data collected by insurance companies and the government show that people who have speeding and other tickets on their record are more likely to end up in an accident. Similarly, people who have two or more accident claims within the past five years are much more likely to experience a third accident in the next few years than someone who has never been in an accident. Your insurance quote will include these risks when calculating your car insurance premium.
Age – Statistically, new drivers are much more likely to experience an accident than those who are older and have more road experience. This is one of the reasons why Ontario maintains restrictions for G1 and G2 drivers such as zero-tolerance for alcohol consumption and prohibiting driving between 12am and 5am. allows new drivers to gain valuable practical experience while minimizing accident risk factors.
Gender – Parents of teenage boys are all too aware that the cost to insure these young drivers can be expensive. That’s because the statistics are clear: Young men are significantly more likely to be involved in a car accident than young women. The insurance rates for young men reflect the additional costs that insurance companies pay in claims for this group. But rest assured, as the teenager becomes a man, their driving experience tends to improve, and their car insurance premiums decrease.
Car usage – A car that’s being driven to and from a place of business that’s located far from your home on a daily basis is much more likely to be involved in an accident than one that is only used for the occasional errand. To reflect the additional likelihood of an accident, vehicles that are used to commute to work will pay a higher premium than those that aren’t.
Location – And this brings us to the main topic of this post, location. Where you live and the experience of those who live around you can have a substantial influence on the amount you’ll pay for car insurance in Ontario. Let’s dig deeper to find out why this is the case.
Why are car insurance rates more expensive in certain cities?
When insurance companies look at car insurance rates they use the concept of indemnity. To indemnify someone is to put them in the same position they were in before the loss. For car insurance, this means either to repair a vehicle to the condition it was in before it was damaged or an actual cash value payout of your vehicle’s value minus depreciation. If your vehicle is new, you can also purchase a depreciation waiver to cover your vehicle’s full replacement cost.
Similarly, if someone is injured, the insurance claim payment should be adequate to help them recover to the condition they were in before the incident – or to get as close to that state as possible. Obviously, there are many other factors that are involved such as deductibles, exclusions, depreciation and how serious injuries are treated, but the general goal of indemnification is to put you back to where you were before the incident.
With this in mind, insurers look at the cost to do this in various towns and cities. Costs tend to be higher in larger cities because of a number of factors, including:
Traffic conditions – Some cities have much worse traffic conditions than others. A driver in a city like Toronto, with its network of highways, millions of commuters and complicated downtown intersections is more likely to experience an accident than someone who lives on a country road and works from home.
Car thefts – Cars are stolen more often in urban and suburban neighbourhoods than in small towns and rural areas. Some of Canada’s major cities have become somewhat notorious for car thefts. If you live in an area with a higher risk for vehicle thefts (especially if you own a vehicle that’s popular among thieves), you can expect your rate to be higher than an area with low theft rates.
Repair costs – It shouldn’t surprise anyone that it’s usually more expensive to repair a car in a city than in a smaller town. Even within urban areas, some Canadian cities are more notorious for being more expensive than others. This is due to an increased cost of labour and rent/property in cities. Insurance is more expensive in areas where it costs more to repair a vehicle.
Geographic factors – Rural locations don’t get a free ride when it comes to location-based insurance costs. Some drivers living in certain areas of the province may experience higher rates because their area is known for harsh weather conditions, difficult roads or other geographical features that cause a higher-than-normal vehicle accident rate.
If you are wondering which city has the cheapest car insurance in Ontario, wonder no more. In 2022, the insurance rate aggregator, Ratesdotca compiled a report of average rates in cities across Ontario.
Cities with the cheapest car insurance in Ontario
- Kendal ($1,271)
- Port Hope ($1,175)
- Amherstview, Brockville, Iroquois, Martintown, Elizabethtown, Cornwall, Kingston and Gananoque tied for third to tenth place at $1,132.
Rate change (2020-2021)
|Kendal||$1,271||7.6% rate reduction|
|Port Hope||$1,175||6.5% rate increase|
|Cornwall||$1,132||2.3% rate increase|
|Amherstview, Brockville, Iroquois, Martintown, Elizabethtown, Kingston & Gananoque||$1,132||2.6% rate increase|
Cities with the most expensive car insurance in Ontario
The ten cities with the most expensive car insurance in Ontario as reported by Canadian Underwriter:
- Vaughn ($2,179)
- Ajax ($2,104)
- Richmond Hill ($2,025)
- Brampton ($1,976)
- Mississauga ($1,971)
- Pickering ($1,959)
- Toronto ($1,953)
- Oshawa ($1,833)
- Whitby ($1,792)
- The King Township municipalities of Nobleton, Schomberg, Orangeville and King City ($1,766)
Rate change (2020-2021)
|Vaughn||$2,179||6.7% rate reduction|
|Ajax||$2,104||1.7% rate reduction|
|Richmond Hill||$2,025||11.4% rate reduction|
|Brampton||$1,976||26.8% rate reduction|
|Mississauga||$1,971||16.9% rate reduction|
|Pickering||$1,959||0.1% rate reduction|
|Toronto||$1,953||11.3% rate reduction|
|Oshawa||$1,833||12.1% rate increase|
|Whitby||$1,792||0.9% rate increase|
|Nobleton, Schomberg, Orangeville & King City||$1,766||14.2% rate increase|
Learn more about Ontario cities with the highest car insurance rates.
Why cheapest car insurance in Ontario doesn’t always mean the best option
As we mentioned earlier in this article, every car insurance policy in Ontario offers the same basic policy wording. So, if you are getting quotes from multiple insurance companies for the same coverage (including the same deductibles, limits and additional coverages), should you automatically select the lowest quote? Not necessarily.
If each quote is for the same coverage, insurers only have two ways to reduce their premiums, and both could come back to surprise you after an accident or claim.
Reduced expenses – When you cut expenses, the outcome is often a reduction in customer service. That means longer wait times when you have questions, less experienced staff and older, less customer-friendly technology. Some companies offer different levels of service for new sales than they do existing customer inquiries, meaning you may end up with excellent service setting up a new policy and poorer service when you need ongoing support.
Reduced claims payouts – The second way to reduce premiums is to limit how much money is paid out in claims. For car insurance, this might mean that an insurer is more hardened to apply depreciation to your vehicle when it has been damaged. They may also require you to use body shops they have chosen because they are cheaper, insist on used parts when repairing your vehicle and nickel and dime you when it comes to paying a claim.
The best insurance policy is one that balances the premium while offering high levels of service and reasonable claims settlement.
We strongly encourage you to look at other factors than price when choosing an insurance policy, such as Google and Facebook customer ratings as well as more professional satisfaction surveys operated by groups such as JD Power. They will let you know if customers are satisfied with both the service and their claims settlement.
In summary, where you live can have a substantial impact on your car insurance premium, however, there are other factors that drive your premium.
To ensure you are receiving the best auto insurance coverage, exceptional service and a great rate for your individual circumstance, contact one of our insurance professionals and see how we’re changing the way insurance is sold.