Tell me why…Oh Great and Powerful Actuaries…. Why is Car Insurance so expensive in Ontario? By Jamie Labonte

Cornwall ON – OK so when I bought my last car, about 7 years ago, I wanted something brand new. We had a baby on the way and as much as I loved my old V-Dub, I knew that I couldn’t rely on it not to fail me at a crucial moment. So  we took the plunge and got a brand new Hyundai. I love this car. It’s been very reliable. After 7 years we have put over 300 000 km on it.

Now when I first bought this car, I understood the high insurance rates I’d be paying. The blue book value of the car was quite high. Premiums had to reflect this.

7 years in, it’s still a great car, but it pops, rattles, wheezes a bit.  I’m not quite as confident in it’s reliability anymore. I’ve had to have some work done lately. Don’t get me wrong, we love the car but it’s not the car we once owned 7 year ago.

The insurance companies tend to agree. The blue book value of my car has diminished greatly. I’d be lucky to get even a small fraction of what I paid for the car if I resold it. I’m ok with that. It’s only fair.  So WhY are we paying premiums for a car that don’t diminish? Clearly, the insurance company recognizes that the car’s value has diminished, and heaven forbid, if I make a claim on it, I’ll get far less money now than I would when it was new… why in the world would my insurance not adjust commensurate with the depreciation of the car’s value?

Now, I’m fairly realistic about this. After all, when Dalton McGuinty demanded the insurance companies answer why are they raising rates while raking in fist-fulls of profit, the response from them was to cease publication of quarterly earnings. This is the type of mentality we’re dealing with. So I don’t expect insurance companies to play fair when it comes to calculating my premiums. I do, however expect my government to police them, since they can’t seem to police themselves.

My election request for Dalton, or Timmy, or whoever, is to challenge the insurance status quo. We need value for our insurance dollar. I actually have faith in Premiere McGuinty. He is the only one in recent memory to actually challenge them on their practices. And some insurance premiums have dropped (My homeowners has recently).

If Dalton wants to fire the imagination of Ontarians, this might be just the ticket. Fair insurance premiums for the value of your car….that’s a campaign tag-line I can get behind.

ADDED by Editor:   We asked a local insurance broker about this subject and they replied anonymously that :

Your auto insurance premium is based on many (hundreds) factors, the value of the car being one of the least impactful. Hope that helps.

We have decided to add this poll.  Please vote!


Should the government in Ontario take action to make car insurance more fair?

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  1. That’s a funny response from the insurance company because my wife says that her old Quebec insurance would go down as the car aged….maybe we should look at their system?

  2. Author

    The Quebec insurance system is also “no fault” and government run. Ontario is not based on that. Maybe it should be?

  3. I think the insurance companies, like the oil companies, charge as much as they do because they can. One way to save a bit is to not have collision coverage on any vehicle that is more than about four years old and paid for. I’ve had at least one vehicle on the road since 1965, and none have been newer than five years old, and none have had collision coverage. My current car, an ’02 Mazda Protege is costing me a little under $700/yr for insurance.

  4. Government insurance … nuff said.

    I spent several years under SGI Saskatchewan Government Insurance, they insured my house, my car, my health. The system works …

    Every year because they’d turn a profit, they cut me a cheque! how awesome is that? There rates? the lowest in the country!

    As soon as our politicians stop getting serviced by capitalistic interests we’ll all fare better.

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