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Understanding Auto Insurance Rates: Factors and Savings Tips
March 28, 2025
3 minute read
It’s common knowledge that drivers in Ontario are required to carry valid automobile insurance. But most drivers would admit they aren’t familiar with some of the key terms related to insurance, what’s inside their policy, or how it may factor in how your insurance is priced.
Consider these tips if you want to enhance your ability to protect yourself, including understanding the factors that are used to calculate the cost of your premium.
Auto Insurance Rates are based on many factors
In Ontario, there are many things that play a role in how insurance premiums are developed:
Auto Theft: As auto theft continues to affect Canadians, the frequency of such occurrences has an impact on insurance rates. To help keep your rates lower, it’s important to take steps to protect your car from being stolen.
Driving History: An individual's driving record affects their insurance premiums. Having a clean driving record can lead to lower insurance premiums. Similarly, drivers with at-fault accidents or who have received tickets for driving convictions can lead to higher premiums.
Type of Vehicle: The type of car you drive has a direct impact on how much you pay for auto insurance. Cars that are more expensive to repair or at a greater risk of being stolen may be subject to higher insurance rates.
Geography: Location and driving habits may influence auto insurance premiums. In areas with dense traffic, the likelihood of accidents increases, which can lead to higher insurance rates. Additionally, regions with a history of frequent auto accidents may also see elevated premiums due to the greater risk of incidents.
There are ways to save on auto insurance
Winter Tires: Insurance companies in Ontario are required to offer a discount on auto insurance for drivers who install a set of four matching winter tires designed for use during colder weather and snow. To obtain this discount, contact your insurance agent or broker.
Bundle Auto and Home Policies: Bundling your auto and home insurance policies can save you money. Insurance companies often give discounts for having multiple policies with them. It also makes things easier to manage by dealing with one company for insurance.
Membership Discounts: If you are a member of certain organizations, like alumni groups or professional associations, you might be eligible for discounts on your auto insurance. These membership discounts can help you save money on your insurance premiums.
Coverage Selection: Not all auto insurance coverage in Ontario is mandatory. It is important to understand your unique circumstances and needs and discuss with your insurance agent or broker to help you decide what coverage you need.
Pay-as-you-go: For those who drive less than 12,000 kilometres a year, there are options available where you can pay for the kilometres that you drive. Depending on your driving habits, this can make a difference.
Understanding how insurance works is the best way to protect yourself
For many Ontarians, talking about insurance is uncomfortable. CAA Insurance Company has developed an Auto Insurance Guidebook that helps drivers go back to basics by explaining auto insurance in a simplified manner. This allows drivers to have deeper and more productive conversations with their insurance agent or broker.