Switching Car Insurance Companies in Ontario

Oct 29, 2020

After conducting research, shopping online, and obtaining some car insurance quotes, you realize you’re currently paying too much for your car insurance. Naturally, you might be thinking of switching car insurance companies. While switching car insurance companies in Ontario isn’t difficult, there are pros and cons of it. We’re here to help you figure out if it makes sense to switch car insurance at all.

Why Do My Rates Keep Going Up?

Your car is another year older.  You’ve had no accidents or tickets.  Why in the world is your car insurance premium increasing?  Well, the truth is there are many reasons why your rates could be going up and some of them have nothing to do with you:

  • Maybe there have been more claims in the area you live in.
  • Maybe the market is hardening and rates are going up across the board.
  • Maybe, just maybe, your car insurance company is overcharging you.

Good news is: There may be companies out there who want your business more and are willing to give you deep discounts for switching.   As a rule of thumb: we suggest if your rates increase by 10% or more, it’s time to shop around and possibly switch your car insurance company.

How Do I Shop Around?

The best way to shop around these days is to go online.  You can obtain multiple quotes for car insurance within minutes, for free, all from the comfort of wherever you may be (we suggest a beach).  Once you’ve obtained some quotes and like what you see, you should contact the company or brokerage so they may verify your driving record and search for any additional discounts you may not have included online.

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When Should I Switch?

If you’re saving 10% or more, or a couple hundred dollars or more, most people think it’s worth it to switch.  Gone are the days when people stay with the same company for 20 years.  Most people now switch every 5 years.

And the best time to switch is at your annual car insurance renewal.  Switching on this date ensures you don’t incur any cancellation fees. It is recommended you line things up a few weeks before your renewal. Also, if your insurance company has sent you a cancellation letter, then you had better find a new company before your coverage runs out.

When Shouldn’t I Switch?

Switching car insurance after an accident is not advised for a few reasons.  If you happen to have Accident Forgiveness with your current company, they will not increase your rates due to an at-fault accident.  If you shop around with any other insurance company, they will rate for that accident, essentially treating you as a new driver because of the accident.  You might see quotes that are two or three times higher than your current price.  Don’t even waste your time shopping if this happens.

Also, switching car insurance mid policy is often ill advised.  You will incur cancellation fees for switching mid term which you’ll want to avoid.

What Are the Penalties for Cancelling?

If you do go ahead and switch car insurance companies mid policy, you can expect a cancellation fee.  Not every single company charges a fee, but most of them do.  A “short rate” cancellation fee of approximately 3 weeks worth of insurance will be charged to your account.  If you’re paying $2000 per year, expect to pay a penalty of roughly $125.  Again, you can avoid any penalties by cancelling your car insurance effective your renewal date.  Switching mid policy is advised if your savings greatly outweigh your cancellation fee.

What Do I Need to Do to Switch?

Switching should be easy.  The best way is still to call your broker and ask for a cancellation.  They will send you something called a “Lost Policy Voucher” or LPV.  This is a form to sign which cancels your policy.  You can also sign the back of your current policy and return it, but most people just sign an LPV.

If you’re dealing with a best-in-class company, they’ll probably email you a from to sign with an e-signature, making the cancellation process seamless, cancelling from your smartphone.  Make sure you cancel your old policy though; don’t just let it lapse on its own.  If you don’t specifically cancel your policy, it will get cancelled for non-payment which will further impact your insurance rates.  Your new broker/company is not responsible for cancelling your old policy.

Common Myths About Switching

Did you know that you can switch your insurance company and still stay with your current broker?  Yes, you can. In fact, this is one of the advantages of having a broker.  They will switch insurance companies for you.  You don’t have to leave your broker to switch.  Also, some people think by switching companies after 10 – 20 years with the same company that they are “starting over” or losing their accumulated experience.  This is a myth. Go ahead and switch with confidence.

Lastly, some people think they may get poor claims service if they switch to a new company.  While it’s true that some insurance companies have better claims service than others, it’s a myth that they’ll treat a new customer any differently than a long-time customer.

Shop online, over the phone, or in person with Begin Insurance today.  We have 17 insurance companies to choose from who will compete for your business to save you money.  Let the competition for your business Begin!

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