Auto Insurance

Why do car insurance rates vary from province to province?

By: Miranda Marquit on July 4, 2016
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If you own a vehicle in Canada, you are required to purchase car insurance. Car insurance is mandatory across Canada. However, there is no uniform insurance rate for the country. Insurance rates vary, depending on where you live in Canada. Here are some of the reasons car insurance rates vary from province to province:

Public vs. private car insurance in Canada

Because car insurance is handled by the provinces, each government can decide how to manage the program. Some of the provincial governments have decided to run the car insurance programs, but most of the provinces allow private car insurance. You can get public insurance in British Columbia, Manitoba, and Saskatchewan. Quebec has a hybrid system where the government is in charge of bodily injury car insurance while private companies manage the rest.

While the difference in cost isn’t huge depending on whether or not you have public or private insurance in your province, there is a bit of a difference. This is one of the factors that might influence how much you pay for your car insurance in Canada. It’s interesting to note that, on average, rates in Quebec, with its hybrid system, are the lowest in Canada, according to the IBC. On the other hand, Ontario, with its large number of private insurers on hand to give you a quote, has the highest average insurance rates in Canada.

It’s not just about public or private, though. There are other reasons for insurance rates to vary between provinces.

Accidents in a locality

Insurance is designed to protect your assets in the event of an adverse event. Insurers measure the likelihood that you will be in an accident when setting your car insurance rates. There are some provinces and cities where there is a higher chance that you will be in an accident – and that the insurance company will have to pay out a claim on your behalf.

One of the reasons that Ontario has such high insurance rates is due to the fact that the GTA has a large number of accidents. If you live near Toronto, your rate might be higher, just due to the fact that there is a bigger chance that you will be involved in an accident. Other provinces have lower rates because they have lower rates of accidents. Living elsewhere can mean the insurance company sees you as a lower risk.

Lawsuits following accidents

A factor that you may not consider is the lawsuits that can follow an accident. Different provinces allow different behaviours when it comes to seeking redress in the matter of an accident. If you can sue for more money in one province than in another, you might see higher insurance rates. The insurance company is at a higher risk of paying out more money when you live in a province that allows larger sums of money, or the ability sue for specific damages.

Insurance fraud rings

You might surprised to learn that insurance fraud rings can be a very real problem in some areas of Canada. In places where there are more staged collisions and fraudulent claims, it drives up costs for everyone. Insurance companies have to expend resources to investigate these accidents. In some cases, they pay out claims because there isn’t adequate proof of fraud. No matter the outcome, though, the fact of the matter is that if you live in a province or city with a high rate of fraud, you could pay the price – even if you are a law-abiding citizen.

Bottom line

There are a lot of factors that go into car insurance rates in Canada. No matter where you live, the insurance company is going to take into account your past driving habits and incidents, as well as consider where you live and how much you drive. Insurance rates are different depending on where you live in Canada, and it’s important to realize this as you apply for car insurance.