Ontario’s 2022 budget proposes to reduce car insurance costs. What could this mean for you?


There’s no logical reason to expect an executive named Ford to have a thing for motorists.

Still, Ontario Premier Doug Ford has been showing drivers a lot of love lately. Among other things, it waived and refunded license plate renewal fees, removed some road tolls, and promised to build new highways.

The high cost of automobile insurance is also of concern to the government. When COVID-19 closed schools and workplaces two years ago, Queen’s Park provided some financial relief to drivers, resulting in more than $1.3 billion in insurance savings distributed to motorists who drove significantly less during the lockdown.

In its recently unveiled 2022 budget, the Ontario government proposed new measures to reduce the cost of auto insurance, including changes that would provide consumers with more flexible coverage, a commitment to crack down on car insurance fraud, insurance, as well as improving fairness – including re-examining the use of postcode information to determine premiums.

Ontario drivers may soon be able to further modify their insurance coverage, such as making non-at-fault damage coverage, also known as direct compensation for property damage (DCPD), an optional add-on. It’s an idea that could generate savings for drivers on a tight budget. Those with older cars that are worth less than the cost to insure them could opt out of DCPD coverage, which is currently mandatory in Ontario.

If another driver is responsible for an accident, DCPD covers damage to your vehicle and its contents, as well as loss of use of your vehicle in the event of damage. But if you’re driving an older, inexpensive vehicle, you might want to drop coverage and accept the lower payments (this is separate from collision coverage, which pays for repairs to your car when you’re at fault).

“There are significant savings for the driver who accepts the risk,” says Matt Hands, Director of Insurance at Ratehub.ca. “However, the cost of replacing or repairing the vehicle will be entirely the responsibility of the motorist.”

The government wants to see more innovations adopted, primarily usage-based insurance (UBI) schemes that allow drivers to better control their insurance costs. Sometimes called à la carte insurance, UBI has been around for almost a decade in Canada. It relies on a telematics device that plugs into the OBD-II data port and collects information about the vehicle’s speed and handling characteristics, such as hard acceleration and braking (newer programs don’t). use more plug-ins and only require the driver’s smartphone).

The information is displayed on the driver’s phone app and transmitted to the insurance company, which determines the customer’s driving safety and assigns a constantly changing numerical score. Drivers who opt into the monitoring system are promised at least a 10% discount for their registration.

Despite the promise of instant insurance savings, just 15% of Canadian drivers say they’ve tried UBI, and some of those have reverted to conventional insurance.

“Telematics is a tricky feature,” says Hands. “For a very long time, this could not affect the increase in your rates and only represented an advantage for the motorist.” But some insurers have changed the rules of engagement, introducing the prospect of higher rates for bad drivers.

Ratehub’s own driver survey, conducted in 2021, tapped into consumer apprehension about usage-based auto insurance:

• 77% say they are concerned about possible rate hikes

• 67% are concerned about the accuracy of programs

• 56% have privacy issues

• 51% are hesitant in case it would negatively impact their rates

“If I have to overtake someone on a two-lane highway and briefly accelerate to 125 km/h in an 80 km/h zone, will I be penalized? Hand poses, echoing a common question. The reality is that it depends on the insurance provider and their UBI program. If you consistently engage in bad driving behaviors, you could see your rates go up.

Hands says insurers are listening to motorists’ concerns and making changes. Some programs allow the driver to edit their driving record on the app to remove instances where another family member was driving the vehicle or performing an evasive maneuver to avoid a collision.

“It’s a great feature, but just know that if you change too frequently, you’ll be notified by your insurer,” Hands warns. He would like to see companies offer consumers a trial period with the software, so they can take advantage of the potential benefits and savings – something a few insurers have instituted.

Hands would like to see more “pay as you go” insurance options aimed at inner city dwellers. Aimed at low-mileage drivers whose vehicles stay at home while commuting to work by public transport, the plan offers lower premiums because vehicles are mainly driven on weekends and not during peak hours. to accidents.

As for the much-despised territorial rating that assigns risk based on residential postal code, Hands says the government could choose to remove geography from the criteria, which would make communities like Brampton, Ont., cheaper to insure a car. But the risk would be shared across the rest of the province, which would increase everyone else’s insurance premiums, he says.

“Zip codes are a crude way of allocating risk,” Hands points out. “The Province of Alberta has tried to tie insurance risk to drivers’ credit score, which appears to have some validity.”

As Ontario moves forward with auto insurance reform through its Financial Services Regulatory Authority, Hands warns change is slow in this sector and nothing will happen overnight. on the next day.

“Industry has been slow to adopt digitalization and other technologies in Canada,” he says, while other jurisdictions have embraced innovation much faster. “The UK is ahead of its time, like much of Europe.”

Don’t rely on the Ontario government to provide its own public auto insurance plans. Hands insists that government-run plans are more expensive because there is no competition. Instead, he says Ontario is doing the right thing by working with industry and weighing regulatory changes to deliver savings to consumers.

“It’s about fostering a better relationship with private insurers and ensuring regulatory transparency, which is in everyone’s best interest.”


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