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In Ontario, there’s no special class of insurance for pleasure cars, vehicles that don’t see daily use, such as driving to and from a job. The province has specific requirements for minimum coverage on all vehicles using its roads, and these mandatory amounts don’t take how a car is used into account. Private insurance companies, however, do, and the price you pay for auto insurance depends on this.

How Insurance Companies Calculate Premiums

Insurance companies use a range of factors to price auto insurance policies. While each insurer’s prices and procedures obtain approval from the Financial Services Commission of Ontario, there’s no uniformity between providers. Car insurance remains competitive and every company tries to find a unique and profitable angle.

Statistical data and personal information for each policyholder comprise the bulk of the background for policy pricing. Part of the personal data involves how a vehicle operates. Many motorists use their car to commute to and from work daily, as well as all other uses. These might include shopping trips and family vacations, for example. The insurance company takes note of both daily and annual mileage driven.

Auto Insurance and How a Car Is Used

Car usage is self-declared. The client tells the insurer how their car is used. There’s no mechanism to verify this claim for every policy. When an accident occurs, insurance company investigators may look into how a car was used to determine if the motorist accurately revealed this information.

What Does Commute Means for Car Insurance?

Pleasure use of a vehicle means that there is no driver who uses a car daily to drive to work, school, or other destinations. Typically, this is a designation for a second vehicle. Under certain circumstances though, a driver with one vehicle may declare it for pleasure use only. A person who works at home or who commutes using public transit may convince an insurer that a single-vehicle is only used for pleasure purposes. These vehicles likely have fewer annual kilometers driven, which would be revealed annually through odometer readings, should the insurer inquire about these.

Other Pleasure Use Insurance Considerations

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Collision and comprehensive insurance aren’t mandatory on cars driven in Ontario. Depending on the value of the vehicle and the budget of the motorist, pleasure vehicle owners may bypass adding these types of coverage. Fewer kilometers driven means less opportunity to have an accident. Car theft opportunities, covered by comprehensive insurance, may increase, depending on the vehicle and how it is stored.

Another strategy maintains collision and comprehensive coverage but raises the deductible limits for each of these. Low deductibles drive the cost of car insurance up, while high deductibles reduce it. Ontario’s minimum deductible is $300. Drivers reduce premiums by raising this amount. Deductibles of $500, $1,500 and $2,500 are common.

‘What If’ Planning for Car Insurance

You can take advantage of Ratelab’s no-cost, no-obligation car insurance calculator to see how much money you can save by declaring your car pleasure use only. The insurance savings can offset increased transit costs, making changes to your commute more affordable.

About the Author: Valerie D. Hahn

Valerie is an insurance editor, journalist, and business professional at RateLab. She has more than 15 years of experience in personal financial products. She strives to educate readers and ensure that they are properly protected.

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