- HOW YOUR CAR INSURANCE RATES ARE SET
- WHAT ARE "UNDERWRITING RULES"?
- HIGH-RISK DRIVERS AND THE FACILITY ASSOCIATION
- WHAT IS "NO-FAULT" INSURANCE?
- COMPARE PRICE AND SERVICE
- TIPS FOR YOUNG DRIVERS
- TIPS FOR ALL DRIVERS (HOW TO GET THE BEST VALUE)
- DISCOUNTS
- BUYING MOTORCYCLE INSURANCE
- INFORMATION REQUIRED FOR QUOTING
- WHEN APPLYING FOR INSURANCE, DID YOU KNOW THAT...

Your car insurance rates depend on your insurance company, your car - and on you. While insurance companies have their own insurance rating systems, your rates also depend on a number of factors that you can control. These include your car, your driving record, how much you drive, where you live, and your deductibles. To illustrate how these factors affect insurance rates, the following examples are based on a married couple with one car, a four-door 1994 Ford Taurus. The husband is 38 years old, has been licensed for 20 years and holds a Class G license. He has no at-fault accidents or driving convictions in the last six years, and drives to work, 10 km one-way, with an annual mileage of less than 16,000 km. The wife is 35 years old and has been licensed for 15 years. She holds a Class G license, and has had no at-fault accidents or driving convictions in the last six years.

Keep in mind that the quotes in this section are 1998 average quotes for the Toronto area using information from larger insurance companies. In this particular case, this couple would pay an average of $1,310 per year for car insurance in Toronto.

Your car insurance rates depend on:

Many insurance companies rate makes and models of cars according to their actual claims experience. These include repair costs, the rate of injury, and the likelihood that a particular car may be stolen. If the couple described above drove their four-door sedan in Toronto, they could expect to pay an average annual insurance premium of $1,310. If they drove a 1996 two-door sports coupe instead, their annual insurance premium would be an average of $1,855, a difference of $545. Some insurance companies base their rates on the Manufacturer's Suggested Retail Price of the car, so the more expensive your car is, the higher your premium will be.

The Vehicle Information Centre of Canada (VICC) has a brochure called "How Cars Measure Up". This brochure provides information on the claims experience of insurance companies, including the most popular models of passenger cars. To obtain a copy of the brochure, write to the VICC, 240 Duncan Mill Road, Suite 700, Don Mills, Ontario, M3B 1Z4.

The premium you pay for car insurance also depends on your driving record. This includes at-fault accidents, the length of time you have been licensed to drive, whether or not you have taken a driver training course that your insurance company recognizes, and driving convictions (such as speeding, impaired or careless driving). Generally, your first minor conviction will have very little or no impact on your rates. But if you have a second minor conviction over the course of the past three years, it will affect your premium. If the couple described above drove the four-door sedan and had two minor convictions over the course of the past three years, their annual premium would increase from an average of $1,310 to $1,432. This is a difference of $122. If you have had at-fault accidents over the last six years and/or driving convictions over the last three years, your premium will be higher. Likewise, the better your driving record, the lower your premium will be. See the example given in the section called "Compare Price and Service." How Much You Drive Your car insurance premium will also be affected by how much you drive. This is because the more time you spend on the road, the higher your chances of becoming involved in a car accident. In urban areas, driving to work may include driving to a subway, bus or train station. If you live close to work and do not need to use your car to get to work, you will probably have a lower premium than someone who lives far from work or needs to use their car for business. You may lower your premium by not driving to work at all. In the example above, the couple uses their car to drive to work each day, a distance of 10 kilometers one-way, with an annual mileage of less than 16,000 kilometers. If the couple was to change the use of their car so that they use it for pleasure only (no driving to work), their premiums would be reduced from an average of $1,310 to an average of $1,199. This is a savings of $111 a year. On the other hand, if the couple was to change the use of their car to business use (driving to and during work), their premiums would increase from an average of $1,310 to $1,471. This is a difference of $161 a year.

Car insurance rates are generally higher in larger urban centres. This is because there is a larger number of cars on the road, and the chances of getting into an accident are higher. Also, more cars are stolen in urban areas. Living in Toronto, the couple could expect to pay a rate of about $1,310 a year for car insurance. If they lived in London, Ontario, however, they would only pay about $872 a year. This is a savings of $438 a year.

Your deductible is the portion of a claim that you are required to pay. Your deductible can vary, depending on the type of coverage you have and the percentage of fault you are assigned in the event of an accident. There are deductibles for Collision, Comprehensive, Direct Compensation-Property Damage (DC-PD), All Perils and Specified Perils coverages. See the section called "Glossary" for a definition of each of these coverages. Collision and Comprehensive coverage each have a standard deductible of $300, but you can lower the cost of your car insurance premium by choosing to pay a higher deductible on these coverages. You can also get a lower premium by having a higher deductible on DC-PD coverage. These savings are due to the fact that higher deductibles mean you pay more towards the cost of repairing your car, while your insurance company pays less toward the total cost of repair. As a result, your premium will be lower. If you'd rather have lower deductibles, you may be able to do so if you meet certain conditions and if your company offers them, but your premium will be higher. If you have an old car, you may choose to reduce your premium further by dropping collision and/or comprehensive coverage entirely. The choice is yours. Here are some typical savings with increased deductibles. Check with us to find out how much you can expect to save.

Coverage Type	Increased Deductible	Approximate Savings
Collision	$300 to $500 deductible	$38/year
Comprehensive	$100 to $300 deductible	$29/year
DC-PD	$0 to $300 deductible	$29/year

Insurance companies use underwriting rules to decide whether or not to sell car insurance to you. Insurance companies also use underwriting rules to decide whether or not to renew your existing car insurance policy, or to change your physical damage coverage, such as collision or comprehensive coverage.

All underwriting rules used by insurance companies are reviewed by the Financial Services Commission of Ontario (FSCO). FSCO regulates insurance companies that are licensed to do business in this province.

Once FSCO has reviewed these rules, insurance companies must adhere to them. If an insurance company refuses to sell you an insurance policy, or to renew your policy, the company must advise you in writing which rule (or rules) it has used to deny coverage to you.

While underwriting rules differ from company to company, there are some common rules. These include:

the number of at-fault accidents and driving convictions you or drivers in your household have had,

whether you've had your car insurance policy cancelled because you failed to pay your premium, or

whether you've failed in the past to provide correct or complete information when applying for car insurance.

When shopping for car insurance, or when trying to renew your car insurance policy, keep in mind that an insurance company's underwriting rules may affect whether or not you can obtain insurance - or continue to be insured - with that insurance company. Check with us to find out what a company's underwriting rules are and how they may affect you.

Insurance works according to a "pooling" concept. This means that companies "pool" the money they receive from you and the other drivers they insure. As a policyholder, you and the other drivers are part of the company's risk pool.

The cost of all the claims paid out by the insurance company is reflected in the rates it charges its drivers. Companies are careful not to insure too many drivers who have had a lot of claims in the past, because these drivers may continue to have high claims and may cause insurance rates to increase for all the other drivers in that pool.

High-risk drivers are those drivers who have had an unacceptable number of at-fault accidents, convictions, non-payment of premiums and other risk-related items. These drivers may find it difficult to buy car insurance because they are a higher risk for insurance companies.

There are some companies that will insure high-risk drivers. These companies are known as "non-standard" writers. If you are a high-risk driver, shop around before you approach non-standard writers or the Facility Association, and ask we for more information on both. For a definition of Facility Association, see the section called "Glossary".

Ontario has a "no-fault" car insurance system, but this does not mean that no one is at fault in an accident.

The term "no-fault" insurance simply means that if you are injured or your car is damaged in an accident, then you deal with your own insurance company, regardless of who is at fault. You don't have to go after the at-fault driver for compensation.

Similarly, if any passengers in your car are injured, then each passenger who has a car insurance policy of their own will approach their own insurance company for benefits. If your passengers do not have a car insurance policy of their own, then your insurance company may pay benefits to them. The driver of the other car involved in the accident will claim benefits from his or her own insurance company.

Someone is always deemed to be "at fault" in a car accident, whether partly or fully. The law requires insurance companies to assign the percentage of fault for each of the drivers involved in the accident. This is done by using the "Fault Determination Rules".

These rules, which are set out in a regulation under the Insurance Act, help insurance companies deal with accident claims quickly and economically.

You can get more information on the Fault Determination Rules from the Financial Services Commission of Ontario's website at www.fsco.gov.on.ca, or by calling the Insurance Bureau of Canada (IBC) at (416) 362-9528, or toll-free at 1-800-387-2880.

Keep in mind that the Fault Determination Rules differ from any charges laid by the police under the Highway Traffic Act. For example, if you were unable to stop your car on an icy road and rear-ended another car, the police officer may have told you that "no one was at fault".

This usually means that no police charges will be laid. It does not mean that the insurance companies involved will not consider who was at fault. In this case, the insurance company would apply the Fault Determination Rules, which state that a car that rear-ends another car is at fault, since drivers are required to take road conditions into consideration.Keep in mind that your percentage of fault will determine the amount of deductible you have to pay. Generally, insurance companies will increase your premiums at your next renewal date if you have been deemed to be fully or partially at fault in an accident.

If you don't agree with the way in which your insurance company has determined fault, you should contact the person your insurance company has appointed to deal with consumer complaints. This is usually the company's Ombudsman Liaison Officer. If your complaint is still not resolved, you may write to Ontario's Insurance Ombudsman (see the section called "If Things Go Wrong...Ontario's Insurance Ombudsman May Be Able to Help"). If you are still not satisfied with your insurance company's position, you may choose to go to court.

Price is always an important factor when shopping for car insurance. But the lowest price won't necessarily mean that you'll get good service, too. To get the best value for your money, you should find out about the level of claims service offered by an insurance company before you buy.

Do you know someone who recently had a claim with their insurance company? If so, were they able to report the accident to their broker after normal business hours? How quickly was their car repaired? How quickly were their injuries taken care of? Were they pleased with the service they received?

How will your first accident affect your premium? Companies have different ways of assessing how much of a risk you are after you've had your first accident.

And, companies will also assess your risk differently, depending on whether you are an existing customer who is renewing a policy, or a new customer.

Some companies will forgive a first accident for existing customers, so your first accident may have little or no impact if you stay with the same insurance company. If you decide to switch companies, your first accident may be reflected in the premium you pay. Before you buy your policy, you might want to think about the price you will pay now, as well as the price you may have to pay if you have an at-fault accident sometime in the future.

Let's take the same example of the married couple used in the section called "How Your Car Insurance Rates Are Set." The couple pays $1,310 in insurance premiums each year.

Suppose the husband has an at-fault accident. The company does not entirely forgive this first accident, and when the couple renews their policy with the same company, the new rate, taking into account the at-fault accident, is about $1,456. This is an increase of $146 over the rate paid before the first at-fault accident.

It may be tempting for the couple, after the at-fault accident, to think they can get a better insurance rate by switching their business to another insurance company. But as a new customer, another company may consider the couple to be a higher risk, since they don't have a previous relationship with them as a policyholder.

But as a new customer with that insurance company, and with one at-fault accident on their record, the couple would pay an average premium of $2,167. This is about $857 more than the couple would pay if they were an existing customer with an insurance company.

In this case, the difference between renewing with the same company ($1,456) and the rate charged as a new customer with the insurance company ($2,167) is $711.

Please note that the numbers used above are averages using information from larger car insurance companies. The numbers should be used only as a guide. Check with we for the amount you can expect to pay.

As a young driver, here are a few tips on getting the best rate for you:

Take a driver training course that your insurance company recognizes.

Consider gaining experience as a named occasional driver under the insurance policy of one of your parents, rather than as a principal driver of your own car. Premiums for young, occasional drivers are much lower than premiums for young, principal drivers.

Ask your insurance company if they offer any student discounts. Some companies give discounts to young drivers with good grades, or young drivers who live away from home for part of the year.

As a young driver, building a good driving record, which is free of at-fault accidents and driving convictions, is the best way to ensure low future premiums.

To ensure you get the best value from your car insurance policy:

Choose your insurer carefully by comparing price and service.

Build a good driving history free of accidents and convictions. This means driving safely!

Don't pay for coverage you don't need. For example, if you have an old car, it may not be worth having collision and comprehensive coverage.

Consider higher deductibles. This means you'll contribute more toward the cost of your claim if you have an accident, but it will also mean a lower premium.

Make sure you always pay your premium on time. If you pay your premium by cheque or through automatic withdrawals from your bank account, make sure you always have enough money to cover your payment. If your insurance company is unable to withdraw your payment because you don't have enough money in the account, it could result in the cancellation of your car insurance policy. If your policy is cancelled for non-payment of premium more than twice, and you have to purchase car insurance all over again, many companies may consider you a higher risk, and you could pay much more for your car insurance. Also, if you've had your insurance policy cancelled because you failed to pay your premium more than once over the past three years, insurance companies are not required to offer you the option of monthly payments.

Choose your car wisely. For example, if you buy a car with a high theft rate, your premium will be higher. Choose a car with good security features.

Take advantage of discounts which may be available to you. See the section called "Discounts" for more information.

Remember that driving without insurance is a serious offence - and can be very expensive. You could face fines ranging from $5,000 to $50,000, and have your driver's license suspended.

You may be able to get certain discounts on your car insurance premium, such as:


Some insurance companies offer a discount if you purchase your car and home insurance from the same company. This discount can range from 3 to 15 per cent.


You may be able to get a discount if you insure more than one vehicle with the same insurance company. The multi-vehicle discount can range from 5 to 15 per cent.


Most companies offer a discount for new drivers who have completed a recognized driver training program.



Your company may offer you a renewal discount if you have been with that company for a certain number of years without an at-fault accident. The discount can range from 5 to 20 per cent.


If you are retired and meet certain conditions, you may be able to get a retiree discount on your premium. The retiree discount can range from 5 to 15 per cent off your premium for the accident benefits coverage.


Some companies may offer discounts if your yearly car mileage is low or if you have installed an alarm in your car. Each company applies discounts differently, with some applying it to certain coverages only, while others apply it to your entire premium. Check with your HIB broker to find out what discounts are available and how they are applied.


You can buy motorcycle insurance from an HIB broker and some insurance companies which sell motorcycle insurance offer lower rates to certain groups, such as members of motorcycle associations.

Generally, you can expect to pay a lower premium if you have had at least one year of motorcycle riding experience, or if you have completed a motorcycle riding course. The type, size and age of your motorcycle will also affect the price you pay. Usually, the bigger your motorcycle, the higher your premium will be. Also, some insurance companies may not cover certain types of motorcycles, such as high-performance motorcycles or sport bikes.

The minimum insurance coverages and optional benefits which apply to car insurance also apply to motorcycle insurance. See the sections called "Insurance Coverage You Must Have", and "Extra Coverage You Can Buy", for more information.

As with car insurance, shop around and check the claims service record of each insurance company before you buy a motorcycle insurance policy.


Once you've bought your car insurance, remember to drive safely! If you do become involved in an accident, or have your car stolen or damaged, and you and your insurance company disagree on how things should be handled, here are some things to keep in mind.

Ontario's Insurance Ombudsman is a final step for the informal resolution of unresolved complaints about the business practices of insurance companies in Ontario.

The Insurance Ombudsman can offer assistance after you have first tried to resolve your complaint directly with your insurance company. The Insurance Ombudsman can deal with written complaints about insurance companies who are licensed to do business in Ontario in the areas of car, property and casualty, life and health, and travel insurance. If you are unable to resolve your complaint directly with your insurance company, you may then write to the Insurance Ombudsman. When you write to the Insurance Ombudsman, you must describe your complaint in detail and include your insurance company's letter outlining its final position on your complaint.

The Insurance Ombudsman may not inquire into:

a complaint that has not been submitted to the insurance company, and has not gone through the insurer's complaint process; or

a complaint that is being or has been dealt with by a court or an alternative dispute resolution process, or where an individual has a statutory right of appeal under the Insurance Act; or

a dispute over entitlement to, or the amount, of no-fault car insurance accident benefits.

If you have a dispute about accident benefits, you may send an Application for Mediation to the Financial Services Commission of Ontario, Dispute Resolution Group, Mediation Unit, P.O. Box 85, 5160 Yonge Street, Toronto, Ontario, M2N 6L9, fax (416) 590-7077. To obtain a copy of the brochure called The Insurance Ombudsman - Working For You, write to the Insurance Ombudsman, Financial Services Commission of Ontario, P.O. Box 85, 5160 Yonge Street, Toronto, Ontario, M2N 6L9, or call 1-800-263-7965. Or visit our website at: www.fsco.gov.on.ca.


To give you the best possible quote, we will need a lot of information about you and your driving record.

While not necessary, if you are the detail oriented type and like to look at what questions you will need to be prepared to answer, you may find it helpful to reference this checklist. It will give you a good idea of what we look for.

You will need to collect the same information for each additional car and driver you want to insure.

Be sure to tell us if you have upgraded electronic equipment or accessories in your car, or if you have made modifications to your engine. We will make note of this, and depending on the equipment and modifications, you may have to pay a higher premium. If you don't tell us about the upgrades, you may not be able to be reimbursed for the full value of your upgraded equipment or accessories in the event you have a claim.

Your car insurance rates are based on the information you have given to us. An insurance company has the right to cancel your coverage if the information you have given is not correct or complete.

Your Car
Make:
Model:
Year:
Distance driven one way to work:
Annual mileage:
Do you use your car for business? Y N
Vehicle Identification Number (VIN):

Your Current Broker, Agent or Insurance Company
Name:
Company:
Phone:
Insurance policy number:
Coverage:
Deductibles:
Your current annual insurance rate:

You (as principal driver)
Gender:
Birth Date:
Marital Status:
Number of years you have been licensed to drive in Canada or the U.S.:
Your driver's license number:
Has your policy ever been cancelled for non-payment or any other reason?
Are you a first-time driver?
Did you receive driver training?
List details of all accidents and claims in the past 6 years:
List dates of all traffic violations (not including parking tickets) in the past 3 years:
Coverages:
Deductibles:

Other (Occasional) Drivers
Gender:
Birth Date:
Marital Status:
Number of years licensed to drive in Canada:
Did they receive driver training?
Do they have a Driver Training Certificate? Y N
List details of all accidents and claims in the past 6 years:
List dates of all traffic violations (not including parking tickets) in the past 3 years:


...when buying car insurance, you must provide correct and complete information on your application form. If you don't, your insurance company has the right to cancel your coverage.

...if you want to change insurance companies, you should do so when your current car insurance policy expires. If you cancel your policy before it expires, you may have to pay a penalty.

...if you don't want to renew your policy, you should notify your broker or agent immediately. Don't just stop making payments - that will result in cancellation of your policy because of non-payment of premiums, and you may have to pay higher premiums as a result.

...an insurance company cannot charge you higher car insurance premiums just because you have had a lapse in coverage (periods when you have cancelled your insurance coverage for valid reasons, such as if you sold your car and didn't need insurance coverage for a period of time). There are exceptions, for example, if your lapse in coverage is due to cancellation of your policy because of non-payment of premiums. Ask we for more information.

...you should never buy insurance from a company that accepts barter payments. Bartering is the exchange of one item or service for another, such as exchanging car repairs for house painting. Companies that accept barter payments are not licensed to sell insurance in Ontario, and if you buy car insurance through barter companies, you do not have valid insurance and may have to pay substantial fines. Remember, car insurance can only be sold by a licensed broker, agent or insurance company in Ontario.

...if you are involved in an accident with someone who does not have car insurance, your own uninsured motorist coverage will protect you. That protection is limited to $200,000, unless you buy increased liability coverage and have bought the family protection coverage. Ask we for more information. ...if you have a lot of comprehensive claims, your insurance company may require you to have a higher deductible or may refuse to sell you comprehensive coverage at all.

...the best way to keep your premiums low is to drive safely! Building a good driving record, with no at-fault accidents or driving convictions, is the best way to keep your premiums low.


source: (IBC) Insurance Bureau of Canada


If you have any questions about auto insurance, please email Tiffany at tiffany@hubbardinsurance.com