Shopping for car insurance in Toronto can be a dizzying task. With so many options, we can't blame you for feeling a little overwhelmed. But with a bit of guidance, you'll be on your way to becoming a master of buying insurance and saving money in the process. With our guide to car insurance in Toronto, you’ll learn about the types of insurance available in Ontario, the minimum insurance requirements in the province, where to buy insurance, how to save on insurance premiums, and more.
Types of Auto Insurance in Ontario
There are multiple types of auto insurance available in Ontario, ranging from those that only cover the damages you do to other peoples' property to those that also cover your car in full. Here’s a quick breakdown of each option.
Liability Coverage
Liability coverage, also known as third-party liability coverage, is the bare minimum auto insurance required across Canada. This covers anyone injured or killed and all physical property damages caused by a car accident for which you’re at fault (aka an at-fault accident).
For example, if you're in an accident and damage someone's vehicle, liability coverage will fix their vehicle — up to the policy limit — but will not repair your vehicle. It'll also cover any medical bills incurred by the person you hit, but not your medical bills.
Collision Coverage
Collision coverage expands upon liability by adding coverage for the policy owner's car too. So if you were at fault in an accident, your insurance would cover damage to the person whose car you hit and their medical bills, plus your own car's damages and any injuries you sustained.
Comprehensive Coverage
As its name implies, comprehensive coverage is the broadest of all auto insurance coverages. Comprehensive car insurance generally includes everything collision coverage does and adds coverage for other types of losses, such as vandalism, theft, or flood damage.
GAP insurance
Guaranteed asset protection (GAP) insurance is an auxiliary type of insurance that covers beyond what a standard insurance policy will cover.
Canadian car insurance companies will pay up to the market value for your vehicle if it’s damaged beyond repair or deemed unrecoverable in a theft. If the vehicle is financed and you have negative equity — meaning you owe more on the loan than the vehicle's market value — you're stuck paying the remaining balance to the lender. GAP insurance steps in to pay this remaining balance, so your loan is paid in full.
Clutch has GAP insurance available with all pre-owned vehicles. Our team will analyze your purchase and loan and only offer GAP insurance if it makes sense — for example, if you'll owe more than the vehicle is worth for an extended period. If your purchase doesn't need GAP coverage, we won't offer it.
Minimum Car Insurance in Ontario Requirements
While Canada requires only liability coverage, you also fall under Ontario insurance laws if you're shopping for car insurance in Toronto.
In Ontario, the minimum insurance coverage begins with at least $200,000 in third-party liability coverage. However, your insurance must also include statutory accident benefits coverage, which provides you with benefits if you're injured in a car accident, regardless of fault. These benefits include:
- Rehabilitation care
- Caregiver benefits
- Non-earner and income replacement
Your car insurance in Toronto must also include direct compensation-property damage (DC-PD) coverage. DC-PD allows you to collect payment directly from your insurance company for the loss of vehicle use and its contents, even if the other person's at fault.
Finally, your Ontario car insurer must include uninsured automobile coverage, which offers you benefits for damages or injuries caused by a hit-and-run collision or an uninsured driver.
Minimum Car Insurance Required on a Financed Vehicle
Toronto drivers who financed their vehicles will likely have different insurance requirements, as the lender wants to protect its assets. Beyond Ontario's required insurance laws, there is no city or provincial law surrounding the minimum car insurance policy on a financed car.
However, your lender will dictate the required minimum policy. Refer to your financing documents for this minimum coverage. If you have inadequate car insurance coverage, your lender may purchase its own insurance and charge you for it.
This forced-place insurance typically has higher premiums than a policy you could get on your own.
Average Car Insurance Rates in Toronto
In all of Ontario, the average car insurance premium is $1,616 per year. Toronto is one of the costliest cities when it comes to auto insurance premiums, as Torontonian motorists pay an average of $2,201 per year.
Torontonians who live in the downtown core or midtown can expect to pay even higher auto insurance rates, which range from $2,202 to $3,000 per year.
Large vs. Small Insurance Companies
When shopping for auto insurance quotes, you'll quickly learn that there are nearly countless auto insurance companies. Some of these companies may be large ones you've seen advertised all over the place, while others you may have never heard of. Which is the better option? Let’s look at the pros and cons of each.
Pros and Cons of a Large Insurance Company
Large insurance providers are great for a few key reasons. First, they tend to have the broadest range of insurance products to meet a wide range of needs. Plus, some also offer home insurance, and you can stack the two coverages for additional discounts.
Large insurance providers also often have multiple communication methods and may be available 24/7 for insurance claims and questions. They may also offer a wider range of payment options and a more robust website that allows you to make quick changes to your policy without calling the office.
However, because they're so large, you rarely get a dedicated agent who knows your situation. Instead, you'll speak with the first available representative when you call. Also, they can't offer personalized pricing like a smaller company can, potentially leading to higher premiums.
Pros and Cons of a Small Insurance Company
Small insurance companies have some benefits, starting with their ability to offer more personalized policies instead of a few canned policies a larger company offers everyone. This can result in a better-tuned policy for you with lower premiums.
With a smaller insurance company, you'll likely get a single agent who deals with you directly. Over time, this agent will become familiar with your situation and offer even more policy customization.
On the flip side, there are some cons to using a small insurance company, starting with a slower communication process. This may also mean it takes longer to make changes to your policy. For example, if you bought a new car, you may not be able to add it to your policy until the next day.
There's also the risk that a smaller insurer lacks the capital to cover all the vehicles it insures. This could cause the company to go out of business, leaving you scrambling to find replacement coverage.
Where to Start Shopping for Car Insurance Rates
There’s no shortage of places to shop for car insurance quotes, whether it’s online or in person. The key is to get as many quotes as possible, but make sure they are apples-to-apples comparisons in terms of coverage.
Captive Insurance Agent
The original way to shop for car insurance was to contact local insurance agents. Each geographic region has agents for various insurance companies. These agents will generally have a small office where they do business, and you can contact that office for an over-the-phone quote or stop by for an in-person quote.
This is a more tedious process, but you often can get a policy specifically for what you need, as the broker will know the ins and outs of the insurance company they represent.
Car Insurance Brokers
A car insurance broker is essentially a car insurance specialist who shops multiple car insurance companies for the best quote. The benefit they offer is superior expertise in the car insurance field, giving them the upper hand on agents who are only experts in a single insurance company's offerings.
The downside to a broker is that they often work on commission and may try to upsell you on policy upgrades you don't need.
Online Insurance Aggregator
Online insurance aggregators take your insurance needs and present them to an array of insurance companies. The insurance companies then put together quotes and submit them to you via email or through an interface on the aggregator's website. You then choose the policy you like and complete the paperwork through the insurance company you select.
The bulk quotes are great for rate shopping, but there are some significant downsides to these aggregators. First, the quotes are based on the limited information you offer the aggregator, so they may not have all the coverage options you need. The limited information also means the quotes you receive on the aggregator could be inaccurate. Finally, these aggregators generally work on a commission structure, so they may tend to promote the company providing the highest commission.
Some notable Canadian car insurance aggregators include LowestRates.ca, Rates.ca, and RateHub.ca.
Buy Direct From the Insurance Company
In today's digital world, it's easier than ever to log onto an insurance company's website and buy auto insurance based on your needs. This will often get you the lowest price in the end, but it will require submitting your information to multiple companies. The primary downside to buying directly from an insurance company is that it takes time and effort. You must do the research to find out exactly what type of coverage you need to meet your local law and your lender's requirements.
How to Get Insurance Discounts
Insurance rates are typically based on several variables, including:
- Driving history: Just one driving offence or car accident on your driving record can increase your insurance premiums for up to six years.
- Type of vehicle: Vehicles with lower average insurance claims are generally cheaper to insure. For example, a BMW’s parts are costlier to purchase, driving up the average repair cost and insurance premiums. The IBC keeps lists of every vehicle’s average insurance claim since 1999 to help you find the cheapest car to insure.
- Area you live in: In general, areas with higher population density have more auto insurance claims, which can increase your premiums.
These variables set your base insurance premiums, but there are ways to get discounts and lower your overall cost. Below we’ve listed the top ways to save on car insurance in Ontario.
Private Parking
If you park in a private lot or garage, this reduces the risk of a comprehensive claim. Some insurers offer discounts for this reduced risk, so make sure to ask about it.
Anti-Theft System
Car theft can be a significant cost to an insurance company, and installing an anti-theft system can reduce this risk. If your car has an anti-theft system, make sure to mention it to the insurer. If your car doesn't have an anti-theft system, ask your insurer if installing an aftermarket one will lower your premium.
These anti-theft systems can be something as simple as a steering wheel lock to an engraved vehicle identification number or an advanced GPS tracking system. Each insurer may offer a different rate discount for each type of device, so double-check which options offer the best bang for your buck.
Winter Tires
Canadian winters can be treacherous and unsafe even for all-season tires. As such, if you have winter tires, some car insurance companies offer premium discounts for keeping snowshoes on your car through the winter and early spring.
Driver Training
It's no mystery that good drivers get some of the best car insurance rates. One way to prove you're working toward becoming a good driver worthy of a discount is to take driver training courses. These courses will teach you defensive driving, safe evasive maneuvers, and other skills that will help keep you and others safe on the road.
Multi-Vehicle Discount
If you have multiple vehicles in your household, you can save money by putting them on the same insurance policy and taking advantage of your insurance company's multi-vehicle discount.
Protect Yourself on the Road
Getting car insurance in Toronto may have seemed intimidating at first, but now that you’ve had a closer look at the details, you can see it's pretty straightforward. We covered a wide range of topics to help you better understand car insurance in Toronto, including the types of auto insurance in Ontario, minimum coverage requirements, and the average rates. Whether you already have a vehicle you love or you’re looking to buy a new car, keeping these tips in mind will help you choose the best car insurance option and get great discounts along the way.
