Auto Insurance in Ontario
How auto insurance rates are set in Ontario
Auto insurance rates are determined by individual insurers using a combination of factors including driving experience, driving record, use and location of the vehicle, the type of vehicle driven, and amount of coverage and deductibles selected.
Legislation requires that the Superintendent of Financial Services review rates proposed by a company to see if they are just and reasonable, not excessive, and do not impair the financial solvency of the company.
The Financial Services Commission of Ontario (FSCO) regulates auto insurance in the province to protect Ontario drivers while encouraging competition in the auto insurance industry. All auto insurers must submit proposed changes to their rates to FSCO for approval.
FSCO analyses rate filings taking into account actuarial evidence to confirm the proposed rates comply with the legislation and conditions above.
Once FSCO approves an insurer's proposed rate change, drivers will see these new rates when their policies are renewed. Most policies are renewed annually.
Five Key Facts about the Financial Services Commission of Ontario (FSCO)
1. FSCO makes sure auto insurance companies follow the law
Drivers in Ontario have responsibilities and rights when it comes to auto insurance. This includes the responsibility to buy mandatory coverage and the rights to be treated fairly by their insurer, to have claims handled in a timely manner, and to file a complaint if necessary. FSCO helps to make sure these rights are upheld.
2. FSCO helps consumers avoid being victimized by fraud
There are many ways that honest consumers can become caught up in fraudulent schemes. For example, dishonest medical clinics may use a patient's information to file false claims or tow truck drivers may collude with repair shops to falsify repair bills. FSCO's website contains tips and educational materials to help people avoid this type of abuse.
FSCO can take action against tow truck operators, vehicle repair services, automobile storage services, legal advisors when not providing legal services and medical clinics who charge or solicit referral fees for or from auto insurance claimants.
Also, FSCO has a dedicated hotline that consumers can use to report suspected cases of auto insurance fraud. People now have a direct channel to report tips about suspected auto insurance fraud 24 hours a day, 7 days a week. Simple and fast, the hotline is accessible on FSCO's website at www.fsco.gov.on.ca/TipNow, as well as by telephone at 1-855-5TIP-NOW.
3. FSCO provides tips for drivers on how to find the best auto insurance rates
FSCO helps educate consumers on ways to save money on auto insurance. Through their website, social media outreach and consumer awareness campaigns, FSCO shares tips on finding the best auto rates.
These include tips such as:
- Establish a good driving history - this means driving carefully and obeying the rules of the road.
- Choose coverage carefully - for example, it may not be cost effective to have Collision and/or Comprehensive Coverages on a vehicle with a lower retail value.
- Pay premiums on time - failing to pay may result in the cancellation of a driver's policy. If this happens more than twice, the insurance may be more costly to re-purchase.
- Bundle home insurance with auto insurance.
- Use winter tires where needed - some insurance companies offer discounts.
- Insure all vehicles with the same company.
- Complete a recognized driver training program.
If people are injured in car accidents and their insurers disagree about accident benefits, FSCO helps settle these differences outside the courtroom in a timely manner through mediation and arbitration services, as provided for in the Insurance Act.
5. FSCO helps keep rates reasonable
FSCO approves all insurance company rates before they are used in the marketplace. Rates must be just and reasonable and appropriately reflect risk.