Ontario Auto Insurance – Dirty Little Secrets

You have no at-fault accidents. You have no speeding tickets. Your car insurance rate just increased over 20 percent from last year and when you call other companies to get quotes they don’t return your call or quote you outrageous prices. There are three reasons why this may be happening to you, and I’m going to let you in on them exposing Ontario’s Auto Insurance Dirty Little Secrets.

1. Past Injuries involved in a claim

If you have ever been injured in an accident and made a claim consider yourself as having some sort of terrible disease that none of the insurance companies want to catch. Although they cannot rate you any higher than someone who has had no claims or not at fault claims without injuries they will find a way to do it.

Accident benefits, (the part of your insurance policy that they will pay you from for rehabilitation or housekeeping expenses, etc), is where insurance companies pay out the most money each year.

In their mind, anyone who has experienced the “gravy train”, of sitting at home and being paid by them for time off work will attempt to milk the system for all its worth if another occasion were to happen in the future. Whether true or not, this is the biggest obstacle to overcome when obtaining fair insurance quotes.

If you find that when you talk to an agent over the phone they give you one rate, then when they pull your insurance history they are difficult to get a hold of, don’t return your calls or quote you much higher, this may be the case.

2. You live in Brampton, Scarborough, or Etobicoke.

At this point in time, (June, 2011), the above mentioned areas have almost been entirely blacklisted by most insurance companies. It sounds ridiculous but it is true. These areas have all had extremely high increases in Accident benefit claims, ( frequency and size of claims). Since auto insurance is regulated by Financial Services Commission of Ontario http://www.fsco.ca/, all rate increases need to be approved by the government before they can take effect. Currently these areas above are all charging premiums below what it is costing the insurance companies due to the surge in costs associated with injury claims. They don’t want any part of the market until their rate increases are approved and the markets stabilize their losses.

3. You have a Bad Credit Score

In Ontario you cannot use credit score to determine rates for car insurance. It is illegal. However, you can use it on home insurance, (and the majority of insurance company’s out there do). When you call for a car insurance quote and they ask you to quote the home insurance first or offer a renter’s package to help discount it be careful. This ploy will tell them your credit score. From that point many company’s have “in-house rules and guidelines”. If your score is above the threshold of what they want as an ideal client, they may purposefully over-quote you, or suggest calling another company to get them off the hook.

What you can do…

The best solution to dealing with these types of tricks and tactics is to shop the market. If you are seeing a 20 percent increase odds are somewhere else will give it to you for less. The only question is how much time you will have to spend looking.