High Risk Insurance in Ontario, also called Non-Standard car insurance, is meant to provide car insurance to licensed drivers who can’t buy regular auto insurance from Standard car Insurance companies because of their higher than average risk profile.
High risk insurance is intended for people with multiple driving or driving-related violations or a combination of the following:
1. Rateable traffic convictions
2. At-fault accidents
3. Criminal convictions
4. Administrative suspensions of driver’s license
5. Non-administrative, driver’s license suspensions when a driver’s license is not reinstated within 3 years
6. New Drivers
7. Non-payment history – Cancellations and NSF payments
8. Drivers who may have not had driven in a significant period
9. Vehicles that do not meet eligibility requirements i.e. Branded rebuilt, vehicles over a certain age, usually 20 years or more
10. Any one or combination of the above or other risk-related characteristics
High risk insurance in Ontario is still governed by the same auto policy that people insured through standard Insurance companies are.
The Ontario Automobile Policy (OAP 1) is the car insurance contract that has been set as the standard and approved auto insurance policy by the Financial Services Regulatory of Ontario, formerly, the Financial Services Commission of Ontario (FSCO).
High Risk Insurance vs. Standard Car Insurance
High Risk Insurance Costs More: substantially more for some.
Payment Options Reduced: insurance premium methods are limited since many drivers are in “high-risk” because of this reason. Be careful folks about this one: don’t assume that “just because you paid it” it should be “fine” One or more not-sufficient-funds, or NSF, within a policy term, might get you cancelled and launched into the High-Risk bracket.
Insurance Coverage Limited:liability limits are usually limited to 1 million; higher deductibles; exclusions and specific conditions, that can affect the Policyholder, listed drivers and anyone else living in the household with a valid Ontario driver’s license.
How to Get High Risk Insurance?
High Risk Insurance Brokers
No distinction between an Insurance Broker sells and services standard market auto insurance compared to a Broker or Agent that deals with High Risk auto.
Experience, knowledge and the number of Insurance companies the Agency or Brokerage represent (meaning more options for YOU) are the main differentiating factors between a “normal” car insurance Broker, and a High risk insurance Broker. These should also be the factors for YOU when making a purchasing decision.
Some Insurance Brokers specialize in different aspects of the car insurance policy, while others don’t have any experience in auto insurance, regular OR High Risk, so it’s important to know the qualifications and experience of the person or company that you do business with.
High Risk Insurance Agents
Insurance Agencies in Ontario who deal with High risk insurance are few. I can only think of 2 at most that will insure high risk drivers.
If you are coming from a direct writer Insurance Company to an Insurance Brokerage, it would help you – maybe even save you thousands of dollars – to know the differences between insurance company vs Insurance Broker vs Insurance Agent. Usually, you’d be dealing with an Insurance Broker if you need High risk car insurance.
Facility Association
The Facility Association is considered the last resort for car insurance if you don’t meet the eligibility criteria of the High risk Insurers. Facility Association is an insurance pool that all auto insurance companies contribute and belong to, who make auto insurance available to high-risk drivers unable to find car insurance in the regular market.
Everyone licensed to drive has a legal right to get auto insurance in Ontario, but sometimes you can be considered too risky, even for the High-Risk market. If you find yourself in this position and can’t afford to get car insurance, consider renting a vehicle instead.
I’ve seen quotes from the Facility Association ranging from $7,000 to $17,000 for a personal lines auto policy, so crunch the numbers and see if it’s worth to rent a vehicle instead.
Sometimes it’s cheaper to rent a vehicle for the year, or half-year, compared to paying crazy amounts that the substandard market charges! Just ensure you know what you are signing and ensure the vehicle is properly insured, whether the car insurance is purchased through the rental agency or independently through an Insurance Broker.
High Risk Insurance Ontario:
Time-Consuming– Many people are not sure where to get high risk auto insurance or who to ask for help. Think of the times you completed an online car insurance quote, only to be asked the same questions over again when calling to confirm your quoted price. Many times the quote you submit online won’t match the confirmed quote by the actual Insurance Broker or Agent.
Industry Confusion– People that are new to driving and auto insurance do not know the difference between an Insurance Broker vs Insurance Company vs Insurance Agent. The statistic is over 50% of people do NOT know the difference! Not knowing the difference could cost you more, way more! This is especially obvious in drivers who have no experience with an Insurance Broker and have always been insured through a Direct Writer like TD, RBC, Sonnet Insurance or Desjardins Insurance Companies.
All Licensed Drivers in Ontario are Entitled to Car Insurance– what this means for you is that you can’t be turned down for auto insurance unless you do not meet an Insurance Company’s Underwriting guidelines. If you don’t meet the risk criteria of ALL the Non-Standard (High Risk) then the Facility Association of Ontario is the last resort. This is the LAW! The unfortunate thing is that you will never be guaranteed the lowest price if you don’t shop around.
How to Get Cheap High Risk Insurance?
Insurance Brokers use a centralized database to produce prices and quotes, but if they don’t have a business relationship or a contract to do business with that Insurance company they can’t offer that price to you! Therefore the “cheapest” quote is relative to the Insurance companies the Insurance Brokerage represents.
This means that the “cheapest” quote isn’t going to come from every Insurance Brokerage, but only the Brokerage that is authorized to do business with THAT particular Auto Insurance company.
So when an Insurance Broker says “that’s the cheapest quote” they usually refer to the cheapest price for the companies they represent! That’s why it’s important to shop around and exhaust every channel to get the cheapest and best coverage in a high risk car insurance policy.
Finding the cheapest price with comparable car insurance coverage involves shopping around, and getting quotes from ALL High Risk Car Insurance Providers.
How Much Does High-Risk Insurance Cost in Ontario?
The cost of High-risk insurance in Ontario varies depending on the high risk driver and the high risk auto insurance company. However, a good rule of thumb is to expect your car insurance premium to double in cost. High-risk auto insurance policies range in price from as little as roughly $1,000 to as much as $10,000! The cost of high risk insurance depends on many factors.
Auto insurance companies calculate your premium by:
- Assessing the high-risk driver, i.e. traffic tickets, at-fault accidents, and driver’s license moving violations.
- the subject of insurance (a type of vehicle)
- How you use the vehicle: i.e. business or personal use, commuting, kilometers driven
- Territory (Postal Code)
- Regulatory change
- Changing economic and market forces
As you can see many factors determine the calculation of your auto insurance premium. Even though an average cost for high-risk car insurance could be obtained with statistics, it wouldn’t be a fair or an accurate reflection of what you might have to pay. The best thing is to contact a high risk insurance broker directly for a high risk auto insurance quote.
How is High-Risk Auto Insurance Calculated?
High-risk insurance companies use similar rating models as standard auto insurance companies. The method to calculate the cost of car insurance is generally the same for high-risk insurance companies compared to regular or standard companies, however, insurance premiums may vary depending on the company and their eligibility criteria.
Similarities include:
- How your vehicle is rated. Based on the CLEAR rating system. i.e. how likely injuries and extent of physical damages would result from a car accident based on the type of vehicle or statistical findings around the make and model of a vehicle.
- How you use the vehicle, i.e business, commute or pleasure, kilometers driven
- Your postal code or territory in which you operate the vehicle
What Criteria Are Used for Rating High-Risk Drivers?
The difference between high-risk auto and standard auto insurance rests on how the high risk driver is rated. It’s common sense that driving behaviour is the differentiating factor for assessing risk and insurance premium rating, as high risk drivers usually have more driving violations compared to Ontario drivers in the standard auto insurance market. There are few exceptions to this rule, one example is trying to insure a vehicle with a salvage brand. In this case, it’s not the driver but the subject of insurance that would force you to look at the high risk auto insurance market, as they are the only companies that may even consider insuring a vehicle with the branding of salvage.
High-risk insurance companies use a risk point and surcharge system to determine the cost of your premium. Risk points, otherwise known as insurance points, are violation markers on your driving record for traffic violations and at-fault accidents.
Risk Points and surcharges are allocated according to the severity of driving violation.
The violations are broken down into groups. (This is just an example; every High Risk Insurance Company is slightly different.)
- Minor Convictions – 1 Point: 20% surcharge for first conviction, 25% surcharge for each additional conviction
- Major Convictions – 2 Points: 40% surcharge for first conviction, 50% surcharge for each additional conviction
- Serious/Criminal convictions – 4 Points: 50% surcharge for first conviction 100% for each additional conviction
- Cancellations: gaps of continued auto insurance resulting from lapses due to cancellations are factored into the premium. Cancellations for non-payment also determine the payment options that can and can’t be offered.
- For a driver licensed less than four years, insurance points attaching to a conviction are doubled
Why is High-Risk Auto Insurance So Expensive?
The logic is that the probability and frequency of the insurance company having to pay out on a claim associated to a driver with many traffic tickets, driver’s license violations, at-fault accidents, history of cancellations for non-payment, or any combination of the above, is a lot higher compared to a driver with a driving and payment record that is much cleaner.
Who Has the Cheapest High-Risk Auto Insurance?
Affordable car insurance for high risk drivers is easy to find if you know the process. This question should be rephrased with “HOW TO GET THE CHEAPEST HIGH-RISK AUTO INSURANCE?”
Not all High-risk car insurance companies OR high risk insurance brokers are created equally. There isn’t solely, one company or brokerage that offers the cheapest high risk auto insurance quote.
Auto insurance rates are standardized in Ontario through a regulatory body, FSCO, which means:
- you can get the same quote from several Insurance brokerages who deal with the same high-risk car insurance company
- , not all brokerages can offer prices from ALL high-risk insurance companies; this depends on how many distribution agreements with high-risk insurers your insurance brokerage has.
- cost of high risk auto insurance has to be authorized by FSCO
- rules for accepting or rejecting risk also have to be authorized by FSCO
The cheapest high risk auto insurance is relative to the insurance broker you use to purchase it. This means that not every insurance brokerage will have a working relationship with the high risk insurance company that’s quoted the cheapest. You would need to find an auto insurance broker that has a distribution channel with that insurer. Ideally, you’d want to choose an insurance broker with access to ALL insurance companies so your bases are covered.
High Risk Insurance Companies Ontario
There are differences between a High Risk Insurance company and an Insurance Broker that you should know! They are not the same thing!
- Insurance Brokers are independent ( in most cases) from the Insurance Company
• Insurance Brokerages are the distribution channel for High Risk Auto Insurance Companies• High Risk Auto Insurance Companies will not sell directly to the public as they are not licensed
• Insurance companies administer and service claims, not Insurance Brokers (some exceptions apply where a company would allow the Brokerage to service some claims, but the Insurance company has the final decision)
Insurance Brokers are independent insurance professionals that represent your best interest. This compared to companies like RBC, TD insurance who are considered “direct writers” and represent the interest of the company. This isn’t to say they don’t have a fiduciary duty, but in a time where a claim is submitted, you have no recourse to an independent source, if something goes wrong, or simply disagree with a claim decision. An Insurance Broker will fight for you in that situation and among other things.
The relationship between an insurance brokerage and an insurance company is based on a business partnership (not in the legal sense). Think of an Insurance Broker almost like a Mortgage Broker, where they try and find the best rates from multiple lending companies for you. An insurance broker does the same but finds the best coverage and insurance costs from multiple high risk insurance companies.
High-risk auto insurance companies do NOT sell directly to the consumer. Instead, High-risk insurance companies use high risk insurance brokers to market and sell their products. Also, Insurance Brokers are licensed to sell insurance to the public, whereas high risk insurance companies do not.
The complexity and nature of the risk require the professionalism and experience of a High Risk Insurance Broker.
The High-risk auto insurance market in Ontario, Canada is small and usually always tied to a Parent company that offers regular or standard auto insurance. This means that Insurance companies will start a subsidiary company to offer high risk auto insurance, so they can separate standard auto from high risk auto business. This is done for business, regulatory and accounting purposes. Also, it wouldn’t be fair for drivers who are not considered high-risk to be lumped together with a higher risk profile driver, since the losses of the few are paid by all policyholders. This is simply not fair.
List of High-Risk Insurance Companies:
- Jevco Insurance: Jevco is a subsidiary of Intact Insurance.
2. Perth Insurance: Perth is a subsidiary of the Economical Insurance
3. Pafco Insurance: Pafco is a subsidiary of Allstate Insurance
4. Echelon Insurance: Echelon is a subsidiary of CAA Insurance
5. Coachman Insurance: Coachman is a subsidiary of SGI( Saskatchewan General Insurance)
6. Facility Association: Facility is essentially a risk-sharing pool for high-risk drivers that are TOO high risk for ALL the High Risk Insurance Companies. Facility is often referred to as the option of last resort.
As you can see there are only a handful of insurance companies that offer High Risk auto insurance. However, many Insurance Brokerages offer and specialize in high risk auto, but not all Brokers are created equal in providing the cheapest high risk auto insurance to high risk drivers!
So, what makes one insurance Broker better at offering cheaper, high risk insurance compared to other insurance brokers? Also, how can one Broker offer cheaper, car insurance, if auto insurance rates in Ontario are ALL standardized and set by FSCO?
- The number of high risk insurance companies the brokerage represents.
The insurance Brokerage may only deal with a set amount of high risk insurance companies, and might not be able to sell you the high risk insurance quote that is the cheapest or best.
- John Smith calls ABC Insurance Brokerage for a high risk auto insurance quote.
- ABC Insurance Broker has a distribution contract to sell auto policies from Jevco, Perth, Coachman Insurance, but can’t offer
Pafco because they do not have a contract to sell their product. - Pafco is the cheapest out of all the high risk car insurance companies. • John Smith would need to find a high-risk insurance broker that deals with Pafco if John wanted the cheapest quote offered by the high risk market
- ABC Insurance Brokers is required by law to offer the lowest price quoted but not if they don’t do business with that company! Therefore, ABC insurance Brokerage may quote you the cheapest price that they can offer, but it doesn’t mean it’s the cheapest. That’s why it’s important to shop around and ask the right questions
Best High Risk Insurance Companies
Shopping for the best high risk car insurance company depends on your insurance requirements. Every auto insurance company is slightly different and one company could be a better fit than others.
Things to consider when finding the best high risk insurance company for you:
1. Cost of High Risk Auto Insurance:
The cost of high risk insurance is probably the single most important factor when purchasing car insurance for high risk drivers. High-risk auto insurance is not cheap and factoring the cost can easily supersede any other criteria you might have in making a purchasing decision. However, the cheapest high risk auto insurance may not be the best!
2. Auto Insurance Coverage:
Many high risk auto insurance companies will limit particular car insurance coverage compared to standard market companies. Liability coverage is a great example as some high-risk car insurers will only offer one million in liability coverage.
3. Customer Service:
Customer service is an important consideration when buying high risk insurance. Picking a company that you know may be better at handling claims may sway your decision towards one company over the other.
4. Other Drivers In Your Household:
Consideration of other drivers in the household is another reason why some drivers choose one insurance company over others. A perfect example is when an auto insurance company wants to exclude a member of the household from your auto policy, usually for not meeting the eligibility criterion.
Some Insurers will waive this requirement if the high risk auto insurance company of the policy in question is insured through the high risk company’s parent company.
High Risk Insurance Brokers
Finding the best high-risk insurance broker involves shopping around for an Insurance broker that will offer you more than just the best insurance coverage for the best cost. Auto insurance in Ontario is very expensive, which makes cost the number one factor when considering the insurance brokerage you choose. But some Ontario drivers want more than just cheap insurance from their insurance provider and insurance broker.
Additional things people may be looking for in a brokerage:
- Customer service
- Flexibility
- Competence
- Specialization
- Options
- Advocacy
- Transparency
You may be looking for the most competent or someone that can treat you with the utmost customer service and peace of mind. After all, insurance is about having peace of mind.
Finding the Best High Risk Insurance Broker:
Find an insurance brokerage that’s able to provide car insurance quotes from ALL high risk insurance companies. This means that the Broker has distribution agreements with the respective high risk insurance companies and allowed to sell their product. The more high risk insurance companies the broker represents the better your chances of securing the cheapest price. However, price is not the only thing to consider!
Being insured through non-standard auto insurance shouldn’t be an indefinite scenario and most drivers are always looking forward to entering back into the regular market. A good Insurance broker will help you transition back into the regular car insurance market where prices are cheaper, insurance coverage is better and payment options are less stringent.
An Insurance Broker should always try and find the best and affordable car insurance for you. Insurance brokers call this remarketing which involves searching for a better price with comparable insurance coverage on policy renewal or when a traffic violation, accident or anything else fall off your driving record that could save you money off your auto insurance premium.
You also want an insurance broker that’s going to ensure that any claim you have will be handled fairly. A good insurance broker should be proactive about your insurance claim and addressing issues and concerns with you and your claim adjuster. Remember, an Insurance Broker works for you rather than an insurance company and usually make a positive difference to the settlement of your claim.
High Risk Car Insurance Is Sold by a Licensed Insurance Broker of Ontario.
Many Ontario drivers have never dealt with an Insurance Broker, but rather direct insurance agents like TD, RBC or any insurance company that sells directly to the consumer public. Ontario drivers who are forced to look for auto insurance in the high risk market may not know the difference between an Insurance broker vs insurance agent. High-risk auto insurance is exclusively sold by licensed registered insurance brokers. If you’ve never dealt with an Insurance Broker the lack of experience may cost you!
In Ontario, Canada insurance rates are regulated and standardized, meaning the prices for car insurance, whether it’s high risk or not, cannot vary for a specific insurance co. from one Insurance Brokerage to another. However, not all high risk insurance brokers have distribution agreements or contracts to sell from ALL insurance companies. This could mean that not every broker can offer you the cheapest car insurance quote. Think of an Insurance Broker as someone that will try and get the best auto insurance quote from most or all insurance companies.
If you want the cheapest high-risk car insurance you need to shop around for the Best High Risk Insurance Brokerage with distribution channels from ALL High Risk Insurance Companies!
Conclusion
High-risk insurance auto policies are the same as regular or standard auto insurance contracts. The difference in risk profile can make one auto policy different or more expensive than the other.
Although the risk calculation is different for a Non-Standard Auto Insurance company compared to a Standard car Insurance company, the Ontario Auto Policy, aka, OAP 1 is still the policy that governs both. This applies to commercial auto insurance too.
The Ontario automobile Policy, OAP 1, is mandated and standardized, along with popular or MAIN endorsements or floaters of insurance, by the Financial Services Regulatory of Ontario (FSRA).
Buying High-Risk Insurance, also known as Non-Standard auto insurance, can be a daunting task of comparing and contrasting prices, quotes, coverage, how it affects others that live in your household, and especially the aspect of affordability and payment options.
Referral checks, Better Business Bureau searches, Internet Reviews, Social Media presence and general research about the Insurance Companies, Brokerages and Agencies can help you make a better purchasing decision regarding high-risk insurance Ontario.
Finding the cheapest price with comparable car insurance coverage involves shopping around, and getting quotes from ALL High Risk Car Insurance Providers.
View Peter Martire, CIP, CRM’s profile
