Auto Insurance in Ontario

Auto Insurance in Ontario

One of the biggest questions Ontario drivers have about insurance is why we have to pay more than other Canadians. There are many factors that determine the cost of insurance in Ontario such as simple geography and insurance fraud. Here’s a breakdown of more factors that contribute to this:

• The Ontario Governments sets the minimum coverage offered to consumers. The coverage Ontario has is broader than what’s provided in other provinces.
• The majority of medical expenses after a car accident are not covered by OHIP. Because of this, insurance companies cover those costs.
• The insurance product framework encourages the escalation of claims, which in turn increases lawyers’ contingency fees.
• Insurance fraud is much more common in Ontario than any other province.
• There are many inefficiencies within the auto insurance framework in Ontario, which leads to higher rates across the board.

So what’s the solution? Here are some key recommendations to improve auto insurance in Ontario:

1. Increase and apply penalties to prevent fraud that persists within the current system. This will help to remove expenses that would otherwise add to overall costs.
2. Have the option to provide more consumer choice. Basic insurance products should be available with options for customers to add on or reduce additional coverage where access to coverage exists elsewhere.
3. Simplify the system and reduce costs. Simplifying the accident benefit and tort frameworks would make benefits accessible without the need for legal representation. When legal representation is needed, there should be increased transparency and consumer protections. 
4. Keep geographic ratings as a variable. It’s an objective way to set rates that distributes cost in proportion to the accident and claims patterns across the province. Consumers in areas with less risk shouldn’t cover the cost of areas with more risk. 
5. New rules on rate setting should be introduced gradually. This will prevent short-term swings in the market which will allow insurers of all sizes to remain competitive and ensure that consumers have a wide range of choice. 

Source: ibao 


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