Auto Insurance is big business in Canada. Seventy percent (70%) of people surveyed in our area have at least one car on their policy. With average Ontario premiums of $1458 a year most people think insurance will ‘take car of things’ if they’re hurt in an accident, and that if they’re injured the benefits will be adequate to help through accident recovery, or to live with the injuries. This isn’t true.
Ontario drivers pay the highest rates for car insurance in the country. The average for the rest of Canada is $928 / year meaning we pay $530 more, or over 50% more every year. Why is this? I commissioned a survey to help answer that question and the results are disheartening.
In 2010 the Government recognized that premiums were too high in Ontario and pledged to lower them. That experiment has been a failure. Rates have not dropped across the board by the 15% promised. Compounding the problem, to get the insurance companies to lower the rates, the government allowed them to reduce many of the mandatory benefits substantially. The public was offered the option to buy extended liability and personal injury benefits, but the vast majority of drivers didn’t buy it.
It seems that people are not aware of how poor standard coverage is, and perceive that the rate charged for extended coverage too high. As an experienced personal injury lawyer, I know the reality of the situation is that the maximum coverage provided by standard insurance is often not enough to allow people to recover fully. Many industry professionals believe that insurance brokers and the government are to blame for so few people buying more coverage. Neither provided enough advertising or education to the public about the significant reduction of benefits that they were subject to.
In the survey, we found 75% of people recall that some changes were made to their coverage last year. When asked if they’d had a conversation with their insurer about the changes, those who did were advised 84% of the time to purchase extended coverage. Half of those who got the quote for the extended coverage bought it. However, that resulted in only 1/10 people buying the increased coverage.
Driving is dangerous. Almost half of the people who responded to the survey said they have been in a car or motor vehicle accident in their lifetime. The older the driver, the longer they had been driving, the more likely they were to have been in an accident. People who have made claims in a car accident were more likely to purchase extra benefits, presumably because they had an intimate understanding of the shortcomings of the standard benefit regime.