The average annual premium for auto insurance in Toronto is now over $2,000. In order to pay less than $1,200 or $100 a month, you need to have a lot of different factors going for you. First of all, you probably need to live somewhere other than Scarborough. It also helps if you’re over 40, with at least 20 years of driving experience, and a clean record.
Everybody knows that Torontonians pay more for everything. In general, that applies to auto insurance as well. But just in case you thought that everyone in Toronto pays through the nose, we ran quotes for a few folks who still pay less than $100 a month. You need to have a bunch of things going your way, but it is possible. Here are the key factors.
1. Age and driving experience
Your age is obviously very important to getting a good price for auto insurance, but we can’t underestimate the importance of how long you’ve been driving. Let’s take the example of Caroline, who is 55 years old, divorced, and living in Etobicoke.
Caroline, 55, divorced female, living in Etobicoke (M8Z)
- Driving for 39 years, 1 minor ticket last year
- (Drives a 2018 Ford F-150 XL Reg Cab 2WD)
- Annual premium of $1,167
If we assume that Caroline started driving around age 16, when she would have legally been allowed to drive, then her premium today would indeed be under $100 a month ($1,167 a year). But if she didn’t start driving until 10 years later, she’d be paying $1,359 a year, even with almost 30 years’ experience.
2. Tickets and accidents
When you get to a certain age and a certain level of driving experience, it can even immunize you from the effect of minor tickets on your record. Because Caroline is 55 years old with almost 40 years of driving under her belt, the minor speeding ticket she got in 2020 will only cost her an extra $136 a year. That same ticket would cost Siobhan, our 37-year-old driver we talk about below, an extra $172 a year, and it would cost a 27-year-old driver an extra $249 annually.
It may seem obvious, but if you want to keep your auto insurance rates reasonable in Toronto, it’s imperative that you keep your driving record clean. As you see above, one ticket won’t necessarily kill you. If you get more than one within a three year span though, or God forbid an at-fault accident, then $100 a month will truly be a pipe dream for you.
3. Where you live (postal code)
Certain parts of the city are simply more expensive for insurance. If Caroline, above, lived in Scarborough, she’d be paying $1,570 a year for her auto insurance. That’s an increase of 35% just for a different postal code in the same city. All other factors, including driving record, exactly the same.
This isn’t arbitrary and it’s not a matter of picking on certain neighbourhoods. Insurance companies track claims costs by the postal code of the policyholder, and certain postal codes, such as those in Toronto, are much more likely to have expensive claims.
To some extent, this can be explained by traffic volume (say, when comparing rural postal codes to more urban ones), but within the same city, it usually has more to do with auto theft and organized insurance fraud rings that operate in certain parts of the city, and artificially inflate claims costs, in some cases by faking injuries in minor accidents, and in other cases just faking accidents altogether.
It’s estimated that together insurance fraud and auto theft cost Canadian policyholders more than $2 billion a year, and those added costs are concentrated where the crimes are happening.
That said, we did find someone in Scarborough who is paying less than $100 a month for auto insurance. Edwin is 65, married, and has a clean driving record. He pays just a smidge under $1,200 a year for insurance on his GMC Terrain.
Edwin, 65, retired, married male, living in Scarborough (M1P)
- Driving for 47 years, clean record
- (Drives a 2020 GMC Terrain SLE 2.0T 4DR AWD)
- Annual premium of $1,176
4. How much you drive
Edwin retired in March, so he got a discount for having a zero km daily commute and only driving his car about 3,000 km a year. Before he retired, he was driving 15 km a day to work and back, and was putting about 15,000 km a year on his Terrain. At that time, he would have been paying $1,451 a year for insurance. He’s saving almost 20%!
Actually, drivers like Edwin, who are either retired or maybe work from home and don’t put a lot of kilometres on their vehicles, can sometimes save a whole lot more with a new product called CAA MyPace. Edwin could be paying as little as $704 a year!
When you sign up for the program, you get a device that you install in your car, and it measures how much you drive. If Edwin kept his driving down to the 3,000 km a year that he estimates he’ll drive in his retirement, he’d pay just over $700 a year. Even if he went over by 1,000 km, he’d still be paying $805 a year. The big drawback of the program is that once you go over 9,000 km for the year, you pay more than you would with a traditional policy.
Other ways to keep insurance costs down
We all want cheaper insurance, but most of us can’t just decide to move to a better postal code on the spur of the moment. If we’re working full-time and don’t have the option to work from home, reducing the number of kilometres we drive may not be an option either. We also can’t magically decide to be 55 years old if we’re only 35.
Those are the things you can’t do. But here’s what you can do:
- Take advantage of discounts.
- All three sample drivers in this story could save an additional 5 to 15% on the premiums shown if they bundled their auto and home insurance or insured 2 or more vehicles with the same insurance company.
- All three are already benefiting from a 5% winter tire discount.
- Edwin is benefitting from low kilometres, but he is getting an additional 5% off because he specifically let his broker know that he’s retired.
- If you’re in the market for a new vehicle, get quotes on the 4 or 5 different models you’re considering before you make a purchase. Edwin would pay about $100 more per year to insure a Honda CRV or Kia Sportage, and if he decided to have a little fun and drive a sports car like a Dodge Charger GT, he’d pay $1,406 a year for insurance on that.
Ultimately though, you may not have the option to get a new vehicle, and may just be stuck with the one you’re already driving. Our last sample driver, Siobhan, is in that situation with a 2007 Honda Accord that’s very reliable, and that’s a good thing, because she can’t afford even a used car for at least a few years. She lives in a basement apartment in the beaches with her common-law partner, and to get full coverage on her Accord, it would cost her $1,305 a year. That’s a bit more than she can comfortably afford, so like a lot of drivers with older cars, she’s decided to remove collision and comprehensive coverage, and keep only basic coverage on the car. That saves her about $250, and makes her annual premium $1,062.
Siobhan, 37, common-law female, living in The Beaches (M4E)
- Driving for 19 years, 1 minor ticket 10 years ago
- (Drives a 2007 Honda Accord LX 2DR with no collision or comprehensive coverage)
- Annual premium of $1,062
There are a lot of ways to reduce your premium, but not all of them make sense. We don’t usually advise our customers to increase deductibles, for example, because if you’re worried about a few hundred dollars a year, then you probably won’t be able to come up with $2,000 to pay the deductible if you get in an accident and need to get your car fixed.
Call our Toronto office for a quote
Toronto is an expensive place to live, but our experienced team of brokers can work with you to get the coverage you need, often for less than you expected to pay. Now that we’ve opened our Toronto Office, you can get great advice, lots of insurance options, and surprisingly low prices, from a brokerage that understands how costly city life can be. Call us right now at (289) 593-0275, or let us know when you’re free and we’ll call you.
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