If you want to drive, you’ll need car insurance, no matter which city you live in. So, why is it that car insurance rates vary so much from city to city? In Ottawa, auto insurance rates are much lower in comparison to most major cities like Toronto. Why is this the case? Let’s take a closer look at why Ottawa car insurance is more affordable than for drivers in Toronto.
How does auto insurance work?
The rules for car insurance in Ottawa are the same as in the rest of the province and are set by the provincial government. The industry is regulated by the Financial Services Regulatory Authority of Ontario (FSRAO). No matter where you live, it is a requirement that you carry a minimum amount of car insurance to operate your vehicle, which includes:
- Third-party liability: Minimum $200,000 – up to $2 million.
- Accident Benefits: Ensures you will receive medical care that is above and beyond what is covered by OHIP. It will cover rehab, attendant care, and even lost income.
- Direct Compensation Property Damage: Covers you in accidents where you are not the at-fault party.
Ontario participates in a no-fault system. If you are in an accident, you will be required to deal with your own insurance company directly to sort out payment for damages and repairs. Car insurance coverage is acquired through private insurance companies, much like other cities in Ontario.
What is the average cost of Ottawa auto insurance?
As the nation’s capital and one of the biggest cities in the country, you may be inclined to think that it has some of the highest car insurance rates. But in reality, it’s quite the opposite. It’s one of the cheapest areas in comparison to other big cities, with the average car insurance policy being $1,151 in Ottawa. That works out to about $96 per month! This is much lower than the provincial average of $1,737, and almost $800 less than car insurance in Toronto.
Ottawa auto insurance rates vs. other big cities
Auto insurance is about risk, and Ottawa has fewer accidents and claims than many other cities in Ontario. It is known for its safe roads, and its car insurance rates reflect this fact. In some instances, you will pay hundreds of dollars less per year in Ottawa than in the GTA. According to FSRAO statistics, here is a comparison of Ottawa’s auto insurance rates in comparison to other Ontario cities:
- Ottawa: $1,826
- Thunder Bay: $2,031
- Toronto: $2,262
- Hamilton: $2,364
- Mississauga: $2,432
Ottawa drivers pay $1,000 less than Toronto-area drivers
According to a recent report released by Ratesdotca, the average car insurance rate in Ottawa is $1,321, whereas the provincial average is $1,744. Motorists in Brampton pay the highest average rates in Ontario at $2,707, while drivers in Toronto and Mississauga pay, on average, $2,300 a year for auto insurance.
Ottawa ranked 52nd out of 62 municipalities in Ontario for auto insurance rates in Ontario.
Ratesdotca says there are a few reasons why premiums in the GTA are more than double what drivers pay in Ottawa. Insurance companies base premiums on how likely a driver is to file a claim based on these three risk factors:
- Individual risk: Insurers base rates on age and gender.
- The type of vehicle in question: Some brands are known for being cheaper for insurance because of their safety rating and lower repair costs.
- Geographic area: Rates vary based on the first three characters of your postal code.
Population size matters when calculating Ottawa auto insurance rates
Population also determines the rates that you pay for car insurance. Ottawa is “less populated” than larger cities like Toronto and Brampton, therefore the risk of claims is lower. In addition, Ottawa has only one highway (Hwy 417) to service its population, meaning a lot less action happening in a pretty vast area. By contrast, cities like Toronto, are “all super tight” and compact with heavy traffic due to high levels of population in a smaller geographic area. As the country keeps growing, many analysts predict that rates will continue to rise in Ottawa. However, not as drastic as hikes for drivers in the Toronto area.
Bill 42 – Levelling rates throughout Ontario?
The average premiums for car insurance in some parts of Toronto are more than $2,000 per year. The disparity in car insurance rates that exists between Toronto and less densely-populated areas has prompted provincial legislation that aims to lower rates for Toronto-area drivers. However, experts warn that this can result in Ottawa drivers paying much more.
Ottawa has lower car insurance rates because companies consider it to be less risky. There are lower claims costs, as well as fewer instances of fraud, theft, and collisions.
A Toronto-area Progressive Conservative MPP introduced Bill 42, last year, which — if passed — will remove geography as a factor in calculating insurance premiums. The Ford government states that ending what it calls “discriminatory practices” is one of its goals. Insurance experts have predicted Bill 42 means higher premiums for drivers in Ottawa and eastern Ontario. Insurance experts predict that ending geography-based pricing might mean a 20 to 30% increase in auto insurance rates for eastern Ontario drivers. This will subsidize the insurance premiums of the higher-risk areas in the province.
Final thoughts on Ottawa car insurance being lower
So, while location is not the only factor that affects car insurance costs, it’s safe to say that drivers who live in and around the GTA pay some of the highest premiums in Ontario. Those in Eastern Ontario can expect to pay less than the provincial average. Cities like Ottawa enjoy lower car insurance rates due to its relatively small population spread out over a larger area. However, there may be changes coming that may take geography out of the rates equation. What does that mean? Drivers in Toronto may see some relief from high insurance rates, though Ottawa may soon be experiencing pain in their wallets in regards to car insurance premiums.
