Switching car insurance companies in Ontario is not uncommon. Policyholders may consider making the switch for a variety of reasons, including finding a better rate, receiving better customer service, or getting enhanced coverage options. Here are steps and things to consider when switching car insurance companies in Ontario:
- Research Different Providers: Before making a switch, shop around and get quotes from multiple providers. Use online tools, contact brokers, or speak directly to insurance companies to gather information.
- Compare Coverage and Premiums: Make sure you’re comparing apples to apples. Look at the types of coverage, deductibles, and limits when comparing rates between companies.
- Check for Penalties: Depending on when you cancel your current policy, there might be cancellation fees or penalties. It’s essential to understand these potential costs before making a decision.
- Consider Timing: Ideally, you’d switch at the end of your current policy term to avoid penalties. However, if you find a significantly better deal or are unhappy with your current provider, it may be worth switching sooner.
- Inform Your Current Provider: Once you decide to switch, let your current insurance provider know. Ensure you have continuous coverage, meaning your new policy starts the day after your old policy ends, to avoid any gap in coverage.
- Document Everything: Make sure to keep a record of all communications, especially when canceling your policy. This will help in case there are disputes about refunds or fees.
- Update Your Information: Once you switch, make sure to update your new insurance details with relevant parties. This could include lienholders if you have a financed or leased vehicle or any party with an interest in your car’s insurance status.
- Review and Understand Your New Policy: Once you have your new policy, read it thoroughly. Ensure you understand all the coverages, exclusions, and any endorsements.
- Consider Bundling: Many insurance companies offer discounts for bundling various types of insurance, like home and auto. If you’re considering switching, it might be an opportunity to consolidate and save.
- Check for Discounts: Different insurance companies might offer various discounts, such as multi-car discounts, safe driver discounts, or discounts for having winter tires. Ensure you’re taking advantage of all applicable discounts with your new provider.
- Stay Informed: Insurance rates in Ontario can change due to various factors, including government regulations, market conditions, and your personal driving record. Regularly review your policy and shop around to ensure you’re getting the best deal.
Risks of changing insurance companies Ontario
Changing insurance companies in Ontario, or anywhere for that matter, can come with certain risks and considerations. Here are some of the potential risks associated with switching insurance providers in Ontario:
- Coverage Gaps: If there’s any lapse in time between the end of your old policy and the start of your new one, you may be left without coverage. This can be a significant risk if something happens during that period.
- Loss of Loyalty Discounts: If you’ve been with your current insurance company for many years, you might be receiving a loyalty discount. Switching companies might mean losing that discount.
- Higher Rates Due to Claims History: A new insurance company might interpret your claims history differently than your current insurer. This can lead to higher premiums, especially if you have recent claims.
- Cancellation Fees: Some insurance policies have cancellation fees if you terminate the policy before its renewal date. Always check the fine print.
- Difference in Coverage: Not all insurance policies are created equal. Switching might mean that certain risks are no longer covered or that you have different limits or deductibles.
- Potential for Mistakes: Starting a new policy might mean filling out a lot of paperwork. Mistakes or omissions can impact your coverage or premiums.
- Establishing Trust: With a new insurance company, you might feel uncertain about how claims will be handled or if customer service will be to your satisfaction.
- Loss of Accident Forgiveness: Some insurance companies offer “accident forgiveness” for longtime customers, meaning that your first at-fault accident won’t result in a rate increase. Switching companies might mean giving up this benefit.
- Change in Payment Plans: Your current insurer might offer flexible payment plans or discounts for paying in full. A new insurer may not offer the same options.
- Risk of Overlapping Payments: If you’re not careful about the transition timing, you might end up paying premiums to both companies for a period.
- Medical Examinations: If switching life or health insurance, you might need to undergo a medical examination. This can lead to higher rates or denial of coverage based on health issues that weren’t previously considered.
- Credit Checks: Some insurance companies perform credit checks when determining premiums. If your credit score has changed since you last obtained insurance, it could affect your new rate.
Pros and cons of changing car insurance companies in Ontario
When considering changing insurance companies in Ontario, it’s crucial to weigh the pros and cons to make an informed decision. Here’s a breakdown of the potential advantages and disadvantages:
- Potential Cost Savings: Shopping around can lead to finding better rates than what you’re currently paying, especially if your life situation has changed (e.g., a better driving record, a safer neighborhood).
- Better Coverage: A new insurer might offer more comprehensive coverage or provide additional features not available with your current insurer.
- Improved Customer Service: If you’re unhappy with the service provided by your current insurer, switching might lead to better customer service and a more satisfactory experience.
- Sign-up Bonuses: Some insurers offer discounts or promotions to attract new customers.
- Modern Amenities: Newer or more tech-savvy companies might offer online portals, mobile apps, or other digital tools that enhance the customer experience.
- Aligning with Current Needs: Over time, your insurance needs can change (e.g., having a new baby, buying a new home). A new insurer might be a better fit for your current situation.
- Rethinking Deductibles: Changing companies allows you to reconsider your deductible amounts based on your current financial situation.
- Loss of Loyalty Benefits: As mentioned earlier, you might lose out on loyalty discounts or perks, such as accident forgiveness, which some companies offer to long-term clients.
- Coverage Gaps: If not handled correctly, there can be gaps in coverage when transitioning between policies, leaving you unprotected.
- Cancellation Fees: Some insurance policies might have fees associated with early termination.
- Different Coverage Levels: The new policy might not be a like-for-like match. It’s essential to ensure you’re comparing equivalent coverage when looking at new policies.
- Potential for Mistakes: Filling out paperwork for a new policy can lead to errors or misunderstandings about what’s covered.
- Claims History Review: A new insurance company might view your claims history differently, potentially resulting in higher premiums.
- Establishment Phase: With a new insurer, there’s a phase of getting to know the company, understanding their processes, and setting up new payment methods.
- Credit Checks: Some insurers run credit checks when determining rates. A hard inquiry can have a slight negative impact on your credit score.
- Medical Examinations: For health or life insurance switches, new medical examinations might be required, which can be time-consuming and possibly lead to different rates or terms.
Penalty for switching car insurance in Ontario
In Ontario, if you decide to switch car insurance companies before your current policy term expires, there might be some implications:
- Cancellation Fees: Your current insurer might charge you a cancellation fee if you end your policy before its expiry date. The exact fee can vary based on your policy’s terms and how far into the term you are. Typically, the earlier in the policy term you cancel, the higher the fee will be.
- Short-Rate Cancellation: Many insurers in Ontario use what’s called a “short-rate” cancellation method. This means if you cancel your policy early, the refund you receive for the unused portion of your premium might be less than the pro-rata amount. Essentially, the insurer could keep a more significant portion of the unearned premium to cover their administrative costs associated with the early cancellation.
- Loss of Loyalty or No-Claim Discounts: If you’ve been with your current insurer for several years without making a claim, you might be receiving a loyalty or no-claim discount. By switching companies, you might lose this benefit, and it could take some time before you qualify for similar discounts with the new insurer.
- Credit Rating: While this isn’t a direct penalty, it’s worth noting that when you shop around for new insurance, some companies might do a “soft pull” on your credit. While this typically doesn’t impact your credit score, it’s good to be aware of.
- Transition Costs: Again, not a direct penalty, but there might be costs associated with setting up a new policy, like administrative fees or down payments.
- Potential Coverage Gaps: This isn’t a monetary penalty, but if you’re not careful about coordinating the end of your old policy with the start of your new one, you could be left without coverage for a period, which can be risky.
Can I switch insurance companies in the middle of a policy?
Yes, you can switch insurance companies in the middle of a policy term. However, there are several considerations to keep in mind:
- Cancellation Fees: Your current insurance company may charge you a fee for cancelling your policy before the end of its term. The amount can vary based on the terms of your policy and how much time remains.
- Short-Rate Cancellation: Some insurance companies use a “short-rate” cancellation method. This means if you cancel your policy before its expiration, the refund you receive for the unused portion might be less than the pro-rata amount. Essentially, the insurer might keep a more significant portion of the unearned premium to cover administrative costs associated with the early cancellation.
- Continuous Coverage: It’s essential to ensure there’s no gap between the end of your old policy and the start of your new one. Driving without insurance is illegal in many jurisdictions and can result in significant fines, penalties, and personal financial exposure if you’re involved in an accident during that gap.
- Returning Proof of Insurance: If you received any documentation (like proof of insurance cards) from your current insurance provider, you might need to return them or notify the company that you’re switching to avoid any confusion.
- Potential Loss of Discounts: If you’ve been with your current insurer for a while, you might be benefiting from loyalty discounts or other perks. Switching companies could mean you’ll lose these benefits.
- Inform Lienholders: If you have a loan or lease on your vehicle, you’ll need to inform the lienholder or lessor of the change in insurance.
- Check for Refunds: If you prepaid your insurance, make sure to ask about refunds for the unused portion. While there might be cancellation penalties, you should still get a refund for the remainder.
- Timing: Coordinate the start date of your new policy with the cancellation date of your old one. This can sometimes be tricky, so work closely with both your old and new insurance providers to ensure a seamless transition.
- Consider Renewal Timing: Sometimes, it might make more financial sense to wait until your current policy is up for renewal to avoid cancellation fees. However, if you’re unhappy with your current insurer or find a significantly better rate elsewhere, it might be worth switching mid-term.
Potential cost savings from switching car insurance companies in Canada
Here are some examples of the potential cost savings from switching car insurance companies in Canada per year and per month, organized by province and for 3 major cities per province. These examples are based on a sample driver profile and may not reflect the exact savings that a different driver profile might experience.
Note: These are only examples, and the specifics of car insurance coverage and costs can vary depending on the individual’s circumstances and the insurance provider. It’s important to compare quotes and review the specifics of the policy before purchasing car insurance.
- Current insurer: $1,832 per year, $153 per month
- New insurer: $1,541 per year, $128 per month
- Cost savings: $291 per year, $25 per month
- Driver profile: 35-year-old male, clean driving record, driving a 2016 Honda Civic
- Current insurer: $1,219 per year, $102 per month
- New insurer: $1,054 per year, $88 per month
- Cost savings: $165 per year, $14 per month
- Driver profile: 30-year-old female, clean driving record, driving a 2017 Toyota Corolla
- Current insurer: $1,337 per year, $111 per month
- New insurer: $1,128 per year, $94 per month
- Cost savings: $209 per year, $17 per month
- Driver profile: 45-year-old male, clean driving record, driving a 2019 Kia Sportage
- Current insurer: $1,505 per year, $125 per month
- New insurer: $1,219 per year, $102 per month
- Cost savings: $286 per year, $23 per month
- Driver profile: 30-year-old female, clean driving record, driving a 2015 Honda CR-V
- Current insurer: $1,451 per year, $121 per month
- New insurer: $1,098 per year, $92 per month
- Cost savings: $353 per year, $29 per month
- Driver profile: 40-year-old male, clean driving record, driving a 2017 Nissan Altima
- Red Deer
- Current insurer: $1,268 per year, $106 per month
- New insurer: $982 per year, $82 per month
- Cost savings: $286 per year, $24 per month
- Driver profile: 25-year-old female, one at-fault accident, driving a 2018 Hyundai Tucson
- Current insurer: $1,176 per year, $98 per month
- New insurer: $935 per year, $78 per month
- Cost savings: $241 per year, $20 per month
- Driver profile: 35-year-old male, clean driving record, driving a 2019 Mazda CX-5
- Quebec City
- Current insurer: $1,058 per year, $88 per month
- New insurer: $865 per year, $72 per month
- Cost savings: $193 per year, $16 per month
- Driver profile: 30-year-old female, clean driving record, driving a 2016 Honda Civic
- Current insurer: $1,335 per year, $111 per month
- New insurer: $1,079 per year, $90 per month
- Cost savings: $256 per year, $21 per month
- Driver profile: 25-year-old female, one at-fault accident, driving a 2017 Ford Focus
- Current insurer: $1,210 per year, $101 per month
- New insurer: $984 per year, $82 per month
- Cost savings: $226 per year, $19 per month
- Driver profile: 45-year-old male, clean driving record, driving a 2016 Subaru Outback
- Current insurer: $1,204 per year, $100 per month
- New insurer: $978 per year, $82 per month
- Cost savings: $226 per year, $18 per month
- Driver profile: 30-year-old female, clean driving record, driving a 2015 Toyota Camry
Can we change car insurance companies every year in Ontario?
Yes, in Ontario, you can change your car insurance company every year if you choose to do so. However, there are some considerations and potential consequences to keep in mind:
- Renewal Timing: Most car insurance policies in Ontario are for a one-year term. At the end of each term, your insurer will typically send you a renewal notice. This is an ideal time to shop around and switch if you find a better rate or coverage without incurring any penalties.
- Potential Savings: Regularly reviewing your insurance options can help you ensure that you’re getting the best rate available, especially if your circumstances change, such as having fewer driving violations or accidents.
- Administrative Effort: Switching insurance companies every year can be time-consuming. You’ll need to obtain and compare quotes, fill out new applications, and possibly undergo new checks every time you switch.
- Loss of Loyalty Benefits: Some insurance companies offer discounts or benefits to long-term customers. Frequently switching insurers means you might not qualify for these loyalty perks.
- Fluctuating Rates: While you might find a cheaper rate one year, there’s no guarantee the new company won’t raise their rates the next year.
- Consistency in Claims Handling: Each insurance company may handle claims slightly differently. By switching often, you don’t establish a long-term relationship with a company, which might be beneficial in the event of a claim.
- Perception by Insurers: It’s also worth noting that if you change insurers very frequently, some companies might view this as erratic behavior. In some cases, it could even affect your premiums or the willingness of companies to insure you. However, in a competitive market like Ontario’s, this is less of a concern, especially if you’re switching for legitimate reasons like better rates or coverage.
- Why would I want to switch car insurance companies in Ontario?
- Answer: Common reasons include finding a better rate, dissatisfaction with current service, changes in coverage needs, or relocating to a different area.
- When is the best time to switch insurance providers?
- Answer: The ideal time is at the end of your current policy term to avoid cancellation fees. However, if you find significant savings or have valid reasons, switching mid-term might be worth the potential fees.
- Will I be charged a fee for cancelling my policy early?
- Answer: It’s possible. Many insurance companies use a “short-rate” cancellation method, meaning you might not get a full pro-rata refund for the unused portion of your policy. Check your policy details or contact your insurer.
- How can I ensure there’s no gap in my coverage when switching?
- Answer: Coordinate the start date of your new policy to align with the end date of your old one. Always have the new policy confirmed before cancelling the old one.
- Will switching insurance companies affect my claims history?
- Answer: Your claims history is tied to you and not your insurance company. When you switch insurers, your new provider will still have access to your previous claims through databases like the Automobile Claims Insurance Reports (ACIR).
- Does switching insurers frequently look bad?
- Answer: Switching too often might be perceived as inconsistency by some insurers, potentially impacting premiums or their willingness to insure you. However, in a competitive market like Ontario, this is typically a minor concern.
- Can my new insurance provider give me a temporary proof of insurance?
- Answer: Yes, most insurers will provide temporary proof of insurance (often called a “pink card” in Ontario) that you can use until you receive your official documentation.
- If I’ve prepaid my premiums, will I get a refund when switching?
- Answer: Yes, you should receive a refund for the unused portion of your premium, but it may be subject to cancellation fees or short-rate calculations.
- Is there a benefit to staying with the same insurance company long-term?
- Answer: Yes, some companies offer loyalty discounts, perks, or benefits like accident forgiveness to long-term customers. However, it’s still beneficial to periodically review rates to ensure you’re getting the best deal.
- How do I inform my current insurer that I’m switching?
- Answer: It’s best to provide written notice, either by mail or email, specifying the effective date of cancellation. Ensure you receive a confirmation or response indicating they’ve received and processed your request.
- What happens if I miss a payment with my old insurance while switching?
- Answer: Missing a payment can result in a lapse in coverage, late fees, and potential cancellation of your policy. It may also impact your credit score and your insurability in the future. Always ensure all payments are up-to-date before switching.
- Do I need to inform my auto lender or leasing company when I switch insurers?
- Answer: Yes, if your vehicle is financed or leased, you should inform the lienholder or leasing company about the change, as they have an interest in ensuring the vehicle remains insured.
- How will my new insurer determine my premium?
- Answer: Premiums are based on various factors including your driving record, claims history, vehicle type, usage, location, and chosen coverages and deductibles. Your new insurer will review all these details to determine your rate.
- If I have an open claim with my old insurer, can I still switch?
- Answer: Yes, you can switch insurers even with an open claim. The claim will be handled and settled by the company that insured you at the time of the incident.
- Can I switch insurance if I have traffic tickets or convictions?
- Answer: Yes, but they might affect your premium with the new insurer. Traffic convictions generally affect insurance rates for 3 years, while more severe offenses might have a longer impact.
- Do all insurance companies in Ontario offer the same coverage?
- Answer: While the basic mandatory coverage required by law is consistent (like third-party liability), optional coverages, limits, and service levels can vary between companies.
- How do I ensure my new insurance policy matches or exceeds my old one in terms of coverage?
- Answer: Carefully review and compare policy details, including limits, deductibles, and any optional coverages. Consulting with an insurance broker can also help ensure you’re getting equivalent or better coverage.
- Will I lose my roadside assistance service when switching insurers?
- Answer: If your roadside assistance is bundled with your old insurance policy, you might lose it when switching. However, you can often add it to your new policy or purchase it separately through another provider.
- Is there a “cooling-off” period after purchasing a new policy in case I change my mind?
- Answer: In Ontario, there isn’t a standardized “cooling-off” period for auto insurance. However, you can cancel a new policy, but cancellation terms, fees, and conditions will apply.
- Will my new insurer provide coverage if I occasionally use my vehicle for ridesharing or delivery services?
- Answer: Not all insurers cover ridesharing or delivery use under standard policies. If you participate in these activities, ensure you inform your new insurer and get the necessary endorsements or specialized coverage.