Many drivers are searching for how to lower car insurance in Ontario, especially as rates continue to rise in 2025. Clients often ask us, “Why is my price higher than my friend’s or neighbour’s? It turns out, it is not as simple as being the same age or living in the same area as someone you know. We found no less than 22 factors that can influence your car insurance premiums. Do you land on the right factors? Here is a comprehensive list, in no particluar order, of the main factors that go into calculating your car insurance and what you can do to lower your rates and make sure you have the right price.
Ontario consistently ranks as the province with the highest car insurance premiums in Canada — and it’s not just because of traffic. Several structural, geographic, and regulatory factors combine to drive up costs for drivers across the province:
1. Urban Congestion and Accident Frequency
Cities like Toronto, Mississauga, and Brampton have dense populations and busy road networks. The sheer number of vehicles leads to a higher likelihood of collisions. More accidents mean more claims, which drives up insurance rates for everyone in the region — even if you haven’t made a claim yourself.
2. Mandatory Coverage Requirements
Ontario has one of the most complex auto insurance systems in the country. Drivers must carry:
These mandatory accident benefits increase the base cost of coverage significantly compared to provinces with simpler systems.
3. Insurance Fraud
Fraudulent claims — such as staged collisions, inflated medical treatment costs, or fake injury claims — are a persistent issue. The Financial Services Regulatory Authority of Ontario (FSRA) estimates fraud adds hundreds of dollars annually to each driver's premium.
4. Territorial (Postal Code) Rating
Your postal code plays a big role in what you pay. Living in an area with a higher frequency of claims — like Brampton or North York — can result in substantially higher premiums, even if you have no tickets or accidents.
5. Rising Car Theft Rates
Ontario has seen a sharp increase in vehicle thefts, especially of high-end SUVs and newer models with keyless entry systems. According to Équité Association, Ontario had a 48% increase in auto thefts from 2021 to 2023, with the GTA being a hotspot. This has driven up claims for comprehensive coverage, which in turn pushes premiums higher. Insurers now consider theft risk by vehicle make, model, and region when calculating rates.
6. Litigation and Legal Costs
Ontario’s accident benefit disputes often result in expensive legal battles. This adversarial claims environment adds administrative and legal costs to the system — which are reflected in your premiums.
7. High Repair Costs for Modern Vehicles
Newer cars come with advanced sensors, safety systems, and electronics. Even small repairs can cost thousands of dollars. These increased costs for parts and labour have made collision and comprehensive coverage more expensive over time
This makes it even more important to understand the specific factors that influence how your premiums are calculated — and more importantly, how you can reduce them. Below are 22 key factors that affect your car insurance rate in Ontario:
Choosing the right vehicle can be a significant step towards lowering your car or auto insurance. While it certainly is more expensive to insure a BMW versus a Honda Civic, the physical damage coverage is only one part of the insurance premium. You are also insuring your body for injury. The vehicle safety rating often has a major impact on the insurance premium.
Generally, the newer the car, the more value it has and the more expensive it is to replace if there is a loss. This makes newer cars pricier to insure. There are however some insurers that will reduce your rates if you purchase a vehicle new. The logic is that if you have the credit to buy a new vehicle, then you are probably less likely to have an accident. While using credit scores to determine auto insurance premiums is illegal in Ontario, it is perfectly legal to discount insurance premiums on new vehicles.
Where you live may be the biggest factor in how your insurance is priced. Urban areas have more vehicles and more things to bump into as opposed to suburban or rural areas. As a general rule, the closer you are to a major metropolitan area, the higher your insurance will cost. Rates are based on historical claims data from that area or territory, with the Greater Toronto Area having the highest rates in all of Canada!
The coverage you select definitely impacts the price. Do you want to cover your vehicle for collision or comprehensive coverage? Should you purchase one million or two million dollars in liability coverage? What deductible is appropriate? If you don't know the answers to these questions, you should consult the advice of a broker who can tailor the right combination of coverage and savings for you.
Installing winter tires not only enhances your safety during Ontario's harsh winters but also offers a practical benefit – it can lead to discounts on your car insurance.The discount can vary from 2% to 5% so make sure you tell your broker if you have them installed.
Your age has an impact on the insurance rate, especially if you are under 25 years old. Young drivers pay higher rates because statistics show they are more likely to have an accident and also more likely for it to be a higher severity. The insurance pricing is reflected in this. As you get older into your fifties and sixties, you could see additional age discounts.
If you are a male under 25 your marital status can have a big impact on the rates. If you are married your rates are much lower. Is the effect of domestication? That is not a leap that I will make here in this article. We do know however that stats show married men have fewer accidents.
As we just saw above, your gender can impact your rates drastically especially if you are under 25; males pay much higher rates than females. There is also a new Gender X designation that Ministry of Transportation of Ontario has approved. For those who are non-gender binary or gender fluid, you can have the MTO change your gender to 'X' on your driver's license. These drivers will get the lower of the male or female insurance rates.
The longer you are licensed and the more experience you have, the lower your prices will be. Do you have a G1, G2 or G license and for how long? This information often has a large impact on the rates.
The number of years you have had continuous insurance impacts your price positively the longer you've been insured. You have established a track record of having insurance without claims which gets you lower rates.
How long have you been insured with your current company as opposed to continuous coverage with any company? Some insurers highly value this factor because it is an indicator of loyalty. Insurers want you to stay with them for a long time and will reflect that in their pricing to try and land you as a client.
This one is obvious. If you have had "at-fault" claims, it will affect your pricing negatively. There is a lot of misconception about no-fault insurance in Ontario and how it relates to claims impacting your rates, enough for another article entirely. Suffice it to say any at-fault collisions on your record within the past 6 years, and sometimes beyond, will impact your insurance rate.
Any Highway Traffic Act violation within the last three years will impact your insurance rate. Convictions, or more commonly referred to as "tickets" come in the form of minor, major and serious with each having progressively worse impacts on your rates. It is important to note that parking tickets do not impact your insurance rates, a common misconception.
A vehicle suspension due to unpaid fines or demerit points may impact your insurance price. It is always recommended to keep your driver's license in good standing.
Many people may not know this but having your policy cancelled due to non-payment of premiums will have a negative impact on your auto insurance. Having multiple cancellations could impact your eligibility for a payment plan or the ability to get insurance at all from a given provider.
Your annual kilometres increases your premiums depending on how far or often you drive. The more you are on the road, the more likely to have an acdident. Makes sense.
Similarly, your daily commute length impacts your pricing as well. Do you work right around the corner or do you commute to Toronto from Hamilton every day on the 403? Guess whose rates will be higher.
The discounts for auto insurance are many. Do you have multiple vehicles insured? Are you bundling with your home insurance? From conviction free, retiree, driver training to good student discounts, there are many discounts you can qualify for and you should discuss with your broker.
In addition, starting 2024, Direct Compensation Property Damage (DCPD) coverage will become optional for Ontario vehicle owners, offering more choice and control over insurance policies
Are you a member of an alumni group, professional association or an employee at a large company? You may qualify for a special group rate or discount. CAA members als get special discounts.
Are you just using the vehicle for pleasure use, or are you commuting to work? Is the vehicle being used to visit clients? Do you have a logo on the car? Are you making deliveries or driving for UBER? All of these different uses will have escalating effects on your insurance rates as the usage and risk increases.
Another factor that could use an entire article devoted to it, Usage Based Insurance (called UBI for short or Telematics), is a way to reward good drivers for their safe driving. Enrolling in Usage Based Insurance programs can now lead to discounts up to 20% per year for safe driving habits. Those drivers who exhibit safe driving habits like not speeding, hard braking or hard cornering will get discounts if these events do not occur. The driving is tracked either by an app on your mobile phone or by a device inserted into your car's CPU. Those who enrol in these programs generally get 10% off just for enrolling, with an additional 15% for safe driving. Potentially saving 25% on your auto insurance for being a safe or seldom driver is a pretty good deal.
One of the fastest ways to reduce your car insurance premium is to increase your deductible — the amount you pay out of pocket before insurance kicks in. For example, moving from a $500 to a $1,000 deductible could save you 5% to 15% annually. Just make sure you have savings available in case you need to make a claim.
We've just explored 22 proven strategies to help lower car insurance in Ontario. The Financial Services Regulatory Authority of Ontario (FSRA) has set the 2025 indexation rate at 1.6%, which affects income replacement and medical benefit limits under standard auto insurance policies. Even with a modest indexation increase, premiums may still rise due to broader market trends like theft rates, repair costs, and fraud. That’s why it’s essential to actively compare rates, consider usage-based insurance options, and customize your coverage to match your needs. While some factors—like age or marital status—are out of your control, there are many actions you can take to maximize your discounts and secure the best possible rate. Need help? Feel free to contact us for personalized guidance.
1. Can installing a dash cam help reduce my car insurance?
Not directly, but dash cams can be useful in proving you weren’t at fault in an accident or fraudulent claim. This can protect your record and avoid premium increases.
2. Do winter tire discounts apply automatically in Ontario?
No. You must notify your insurer when winter tires are installed to receive the 2%–5% discount. Some may request documentation or installation dates.
3. Can I lower my car insurance by removing optional coverages?
Yes, reducing or eliminating comprehensive or collision coverage can lower premiums — especially for older cars — but it increases your out-of-pocket risk.
4. How much can I save with Usage-Based Insurance (UBI)?
Savings can range from 10% to 25% depending on your driving habits. You may get an initial discount just for enrolling, then more if you drive safely (avoid hard braking, speeding, etc.).
5. Is it cheaper to pay my premium annually instead of monthly?
Yes. Insurers often charge installment fees for monthly payments. Paying annually can save you 3%–5% or more in administrative fees.
6. Can bundling home and auto insurance really save money?
Absolutely. Bundling policies with the same insurer can lead to multi-line discounts of up to 15%–20%, depending on the provider.
7. Will adding an experienced driver to my policy help lower my rate?
Yes, especially if you're a young or new driver. Adding a clean, experienced driver (like a parent or spouse) as a secondary driver can sometimes reduce your premium.
8. Do telematics programs affect your credit score or privacy?
No, telematics doesn’t impact your credit score. It tracks driving behaviours, not personal identity data. However, you should review privacy policies before enrolling.
About the author Sean Graham:
Sean Graham has been an insurance broker in Ontario for the past 18 years. He is considered a pioneer in the digital insurance space and has been featured on CTV’s Canada AM, CBC, City TV, AM 640, Newstalk 1010 and Toronto Star. In 2014 he was named one of Canada’s Top 10 brokers under 40. Sean believes strongly in putting the consumer at the center of everything the business does. He is also an advocate for fostering the next generation of insurance talent through education and mentorship.
Photo by Krissia Cruz on Unsplash
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Posted Apr 27, 2019