Switching Car Insurance in Ontario
Switching car insurance companies in Ontario can be a smart decision if you’re looking for cheaper rates, improved coverage or better customer service. Whether your current premium feels too high or seeking a policy that will better suit your needs, exploring new options is always worthwhile. By understanding the process and timing your switch correctly, you can ensure a seamless transition while avoiding coverage gaps or unexpected fees.
Why switch car insurance companies?
Common reasons for switching car insurance companies include:
Finding a Better Rate
Price is the leading factor driving consumers to switch car insurance companies. Since no one wants to overpay for coverage, it’s no surprise that finding more affordable car insurance rates is the top reason people shop around for better quotes in Ontario, Canada.
Policy renewals are typically sent to the insured 30 to 45 days before the policy renewal date. At this time, renewal prices can increase
Acquiring a New Vehicle
Adding a new vehicle to your policy can increase insurance costs due to the added risk exposure. Additionally, insurance companies frequently update their pricing models, meaning the new vehicle will be rated using the most current rates, which may be higher than your existing policy. These factors combined can result in a higher-than-expected premium and may prompt policyholders to look for more affordable car insurance elsewhere.
For example, if you purchase a vehicle and need to insure it under your current auto policy, the new rates may be higher. This could prompt you to explore cheaper insurance options elsewhere.
Adding a Driver to the Policy
Adding a new driver to your policy can also increase insurance costs, similar to adding a new vehicle. The added driver may bring additional risk exposure, which insurers factor into their pricing. Furthermore, the insurance company will apply their most current rates and underwriting guidelines to assess the new driver, which may differ significantly from the rates on your existing policy. These combined factors can result in a higher premium than expected and may encourage policyholders to explore more affordable insurance options.
For example, if your child obtains their G1 or G2 license, they must be added to the policy. Adding a newly licensed driver typically increases insurance costs due to their limited driving experience and lack of insurance history, which poses a higher risk for insurers.
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Moving to a New Address
Moving to a new address can significantly impact car insurance costs, as location and postal code are key factors in calculating premiums.
When you notify your insurance representative about the address change, a new rate will be calculated based on current pricing. This can either increase or decrease your premium, depending on your insurer’s pricing and the location of your new address.
For example, moving from Listowel to Brampton, Ontario, will likely result in a significant rate increase. Auto insurance in Brampton is notably more expensive than in smaller cities like Listowel, where accident frequency and severity are typically much lower. Making an address change can force you to shop around for cheaper rates.
Making Significant Policy Changes
There are instances when you may need to make substantial changes to your auto policy. If your current provider cannot meet your updated insurance needs, you might need to explore other options to find the right coverage.
Some examples include:
Should you switch car insurance companies?
The decision to switch is a personal one, shaped by several key factors. Some common reasons for making the change include:
Deciding whether to switch car insurance companies depends on several factors. However, before making the switch, carefully weigh the savings and benefits against any cancellation fees, loss of loyalty discounts, or the hassle of switching providers. If the advantages outweigh the drawbacks, switching could be a smart and worthwhile decision.
How to switch car insurance in Ontario?
Switching car insurance companies in Ontario is a simple process. Start by notifying your insurance representative of your intention to cancel your current policy. In most cases, you must provide written confirmation, such as signing a cancellation or non-renewal form, to finalize the process.
Switching car insurance companies in Ontario is simple. It involves clear communication with your current insurer and careful planning to ensure a smooth transition.
The following steps will help you make the switch easy and seamless:
Switching car insurance in Ontario is straightforward but must be done carefully. By reviewing your current policy, shopping for better options, and ensuring a seamless transition between providers, you can improve your coverage and potentially save money while avoiding coverage gaps or penalties.
What are the Risks of Changing Car Insurance?
Changing car insurance can offer benefits like better rates or improved coverage, but it also comes with potential risks. Understanding these risks is crucial to ensure that switching is the right choice for your situation.
The following are some risks associated with switching car insurance:
- Cancellation fees—If you switch car insurance companies before the policy renewal date (anniversary date), you’ll be subject to a cancellation fee. This fee is often referred to as a short-rate cancellation fee. Consider it a financial penalty for breaking the contract early.
- Loss of Accident Forgiveness – Accident or claims forgiveness is a common policy add-on, but it’s not universally transferable. If you have this benefit with one insurer (like Company A) and use it, a new insurer (like Company B) won’t recognize it. They will treat the forgiven accident as a chargeable accident, potentially leading to higher premiums.
- High Premiums – insurers frequently update their pricing models, which may lead to higher premiums, especially if the discounts or factors that previously lowered your rate are no longer available.”
- Policy Limitations – A new insurer might offer different terms or lower coverage levels that may not be as comprehensive as your current policy.
- Adjustment Period: Familiarizing yourself with a new insurer’s claims and customer service processes can take time and may not always meet your expectations.
Switching Car Insurance Mid-Policy – Short-Rate Cancellation
Sometimes, switching insurance companies mid-term becomes necessary. This could happen if you add a new vehicle or driver or move to a new address—changes that might increase your insurance costs and make it worth exploring other providers.
Switching companies mid-term means cancelling your car insurance before its renewal date, which typically results in a short-rate cancellation fee. Determining the calculation for this fee can be complicated, but a general rule of thumb is that it is equivalent to one month’s worth of insurance. However, since the short-rate fee is prorated, it diminishes the further you are into the policy term.
Although a short-rate cancellation fee is incurred when switching mid-term, it can be worthwhile if the savings from the new provider more than offset the fee.
Switching Car Insurance Before Policy Renewal
Switching your car insurance before the policy renewal date may raise concerns about potential consequences and whether it’s even allowed. Fortunately, in Ontario, you can cancel your car insurance at any time. However, doing so early typically incurs a financial penalty known as a short-rate cancellation fee. This fee is highest at the beginning of your policy and gradually decreases as your policy term progresses.
Switching insurers before your policy renewal isn’t necessarily a negative move or a financial loss. If the savings from a new provider exceed the cancellation penalty, it can be a very smart decision.
Can you switch car insurance anytime?
In most cases, you can switch auto insurance providers at any time. However, if you have an open auto property damage claim, you must wait until it’s resolved. A claim is considered resolved once the claims adjuster issues a closing notice—typically after a settlement cheque is issued in a total loss situation or once vehicle repairs are completed. If you’re still in a rental vehicle, you must wait until your rental authorization expires.
Does changing or switching car insurance affect credit score?
Switching car insurance does not affect your credit score. However, a cancellation for non-payment will affect your credit rating, if the outstanding is sent for collection.
Will I get a refund if I change car insurance company?
Whether you receive a refund when switching car insurance providers depends on your payment plan and the timing of your cancellation.
Since insurance companies typically charge one month in advance, any prepaid amount—whether for the full year or an upcoming month—will be refunded after deducting any applicable fees. Always check with your insurer to understand how refunds and cancellation fees apply to your specific policy.
Can you switch car insurance with an open claim?
You cannot switch car insurance companies if you have an active auto property damage claim. However, if you have an open accident benefits or bodily injury claim, you can still switch providers since these claims often take longer to settle—sometimes several months or even years.
How often should you switch car insurance companies?
How often you switch car insurance providers depends on your satisfaction with pricing, customer service, claims handling, and coverage options. There’s no set rule—it’s a personal decision. However, because car insurance in Ontario is among the most expensive in the world, many people are primarily motivated to switch providers to save money.
If saving money is your main goal, consider shopping for car insurance every year or at least before your policy term starts. Since insurers frequently update their rates, it’s smart to compare new quotes from different providers at each renewal.