Money and risk go hand in hand in the car insurance industry. The most powerful defense against high car insurance rates is a motorist’s good driving record and low claims history. When that advantage gets lost, drivers pay more and may find the pool of companies willing to offer policies drying up.

Combating the cost of high risk insurance isn’t easy. It takes years of clean driving to rehabilitate a poor record since the insurance industry can attach infractions to a motorist’s record for a decade. Knowing the ins and outs of car insurance in Ontario helps the process.

Factors That Create High Risk Insurance Clients

Not all high risk assessments come from traffic violations, nor do all factors originate with the driver. Driving habits do remain the primary cause for high risk status, however. Multiple speeding tickets can, as an example, bump an otherwise good driver into the high risk zone. Not only that, but the effects of speeding tickets persist for three years after the violation. In the case of more serious violations, such as careless or dangerous driving, the effects could be longer and a drunk driving conviction can stay on your insurance record for 10 years after your license is re-instated. Combinations of convictions can also trigger high risk status.

Modified vehicles, altered to provide higher performance than their stock versions, can also fly off the charts of conventional insurance. Modified vehicles invite drivers to engage in aggressive behaviour, since these cars may perform above and beyond. Modifications themselves change the vehicles in unknown ways, potentially compromising any safety design features. Since a car may be unique after modification, insurers have no way to rate it as a risk. The cost of modifications also affect repair and replacement costs. This is particularly true if the motorist modified the car themselves.

Motorists can be financial risks as well. Those who habitually miss payments or let insurance lapse can earn a high risk designation. Under the Auto Insurance Consumers’ Bill of Rights, administered by the Financial Services Commission of Ontario, you can cancel a policy at any time. However, if you simply let a policy lapse, neglecting to make payments, then you’re in danger of becoming high risk. This could increase your premiums if you resume auto insurance coverage, but only for non-payment of auto insurance. In Ontario, car insurance providers can’t use your credit score to set premiums.

Uninsurable High Risk Drivers

Again, according to the Bill of Rights, every motorist legally entitled to own and drive a car has the right to buy insurance. While individual companies can deny coverage, the insurance industry must provide an offer. Every insurance company is a member of the Facility Association. This industry organization acts as a provider of insurance to the residual car insurance market. This includes high risk drivers who can’t get insurance through regular outlets.

The Facility Association doesn’t underwrite insurance policies itself. Instead, it acts as a go-between for the high risk driver and the insurance companies. In Ontario, insurers must follow approved rules when conducting business. The Facility Association provides exceptions when facilitating high risk policies. The insurance industry has a way to meet its obligations, and high risk drivers have access to car insurance policies.

It does, however, come at a cost to the driver. Because of the risk insurance companies assume when covering such drivers, premiums can exceed $10,000, over five times the cost of an average policy. Insurance companies must offer policies to all drivers. Affordability is not a requirement. Since many high risk driving habits have a statistically high level of re-occurrence, drivers in the residual market pay heavily.

Controlling the High Cost of High Risk Insurance

When a high risk driver has no alternative except through the Facility Association, there is little chance of negotiating discounts or lower prices. Fixing the damage done through high risk factors can only happen with long periods of event-free driving. There are some strategies that can reduce the amount a driver pays, even through Facility Association coverage.

Ontario requires a minimum mandatory amount of insurance on every vehicle driven in the province. This mandatory coverage is not full featured and does not include all types of insurance available for cars. The basic provincial requirement includes third party liability coverage, to protect other people affected by a car accident with an at fault driver. There are other provisions too, including uninsured driver protection, for hit and run accidents. The basic policy is the least amount of insurance a driver can have.

Collision and Comprehensive Coverage

This coverage doesn’t protect the driver’s vehicle from loss or damage. Collision and comprehensive coverage are not required by the government and a driver could forego both insurance types to keep costs down. Note that, if a car is financed, the lender may require collision and comprehensive coverage on the vehicle.

A high risk driver could purchase a low risk and low cost vehicle too. A four door sedan generally costs less to insure than a two door coupe, for example. An older car with a lower book value will usually result in a lower premium as well. If a driver is prepared to write off a vehicle that’s involved in a collision, choosing an older vehicle without collision or comprehensive insurance could reduce the costs of insurance substantially.

If collision and comprehensive coverage are chosen, their costs are minimized by choosing a high deductible. This is the amount a driver pays for loss or repair before the insurance company kicks in financially. Minimum deductibles, the most expensive to purchase, are $300 in Ontario. A driver can choose $500, $1,500 or even a higher amount to reduce the cost of added coverage. Of course, the driver must then be prepared to pay the extra if an accident happens.

Rehabilitating a High Risk Driving Record

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Time is a driver’s best ally when recovering from high risk driving habits. In the case of a modified vehicle, a driver can simply sell the car and purchase a more conservative ride, in insurance terms. Speeding tickets, moving violations and DUI convictions remain on both a motorist’s provincial driving record and insurance risk histories. Most tickets stay on a driving record for three years from the date of conviction. Insurance companies usually consider tickets for a similar length of time. Driving suspensions and serious convictions may remain longer. Identifying precisely how long these offences weigh in is difficult, if not impossible, in Ontario. Every insurance company has considerable leeway in how premiums are calculated and how risk is assessed. As long as these receive approval from the FSCO, an insurer can do as it pleases.

Things You Can Do to Lower Your Auto Insurance Rates

Car insurance can be expensive but it doesn’t have to be outrageous if you know how to cut down your costs. Here’s how you can decrease your overall car insurance costs.

Comparison Shopping for Car Insurance

The easiest way to cut down on your Ontario car insurance costs is to research the various rates for car insurance. You can do this online with many comparison sites and look for a good overall rate for your car insurance. You can get quotes form several providers and then go over these quotes and decide what rate and policy work best for you. The first thing you need to do to save money on insurance it to do some investigating to find out where the lower rates are.

Only Get Coverage You Need

It’s great to have as much insurance as possible, but you might not need some insurance. Many insurance packages just won’t apply to you. For example, if you have an older car that isn’t worth repairing if it’s in a car crash, you shouldn’t get full insurance on this vehicle because that would be a waste of money. You need to get insurance that works for your individual needs. An insurance provider may try to sign you up for insurance that you don’t need, so if you want to save on your insurance, just get a policy that works for you. If you have a new car, you’ll need more coverage than someone who drives an old truck.

You’re only required to carry a minimum of coverage to operate a car legally in Ontario, and this is exclusively to protect against personal injury or damage caused to other people’s property. Third party liability coverage needs only to be in the amount of $200,000, but you may have trouble finding a company that will sell you that amount, since accident settlements can easily climb beyond this point. As a practical minimum, $1 million is the standard amount. Many insurers offer car insurance packages with this as standard third party coverage, along with a variety of other popular features and coverage amounts.

Raise Your Deductibles

A deductible is the amount you are obligated to pay in an at fault accident. If you have a $250 deductible, for example, you pay $250 in repairs before your insurer pays a dime. When your deductible is $1,000, the same applies. If you have $750 of damage, your insurance company pays nothing at all. While it seems that the low deductible is the way to go, you’ll pay for that privilege every month when you pay your car insurance bill. Raising your deductible will in turn lower your premiums. It’s up to you to choose the right balance.

Address Your Driving Record

If you can keep a good driving record, this will decrease your insurance costs the next time you purchase insurance. If you can keep this up for several years, you can substantially reduce your insurance costs because you’re seen as less of a liability to the insurance provider. You should check with your provider to see what sorts of discounts they give to drivers who maintain a good driving record over several years. This is the best way to reduce your costs, overall.

Explore Insurers’ Discounts 

Using one insurance company for auto, home and life insurance may save you money on all three through promotional packages and discounts. Most insurance companies will offer you incentives to get more of your insurance business. Some offer loyalty discounts, though you should still compare your rates with other insurers. In some cases, insurance companies want you to remain loyal to paying their higher premiums.

Other discounts may be age or safe driving related. New drivers can get discounts for taking approved driver training programs, and young drivers can even qualify for rate reductions by maintaining high marks in school. Adding a telematics device in your car may add up to 10 percent in discounts immediately with further good driving rate reductions later.

Car insurance companies are about making profit. Obviously, they want to charge as much as they can and pay out as little as possible. However, customer service and competition being what it is, there is balance between the profit goals and the customer service aspects. While insurance companies offer discounts for various situations, they probably won’t be very vocal about announcing these to a driver who has been happily paying a non-discounted rate for some time. This underscores the need to ask. No reason to be embarrassed. It’s your money you’re protecting.

Returning to the Regular Insurance Market

As tickets and offences fall into the past, a driver qualifies again for auto insurance through regular insurance sources. An excellent way to check eligibility uses Ratelab’s car insurance calculator. Entering a driver’s information searches over 50 insurance providers in Ontario to recover the best rates for the desired coverage. If no regular company offers a policy, there will be no result but when offences expire, quotes appear. The driver receives the qualifying companies and the estimated prices for insurance.

Check your best opportunity today by entering your postal code below and completing the remaining information. Ratelab’s car insurance calculator will do the rest.