Affordable Automobile Insurance

Auto insurance rates for Ontario drivers are likely to soar skywards in the coming months, though the government says it is going to address the issue of hike in auto insurance premiums. Recently the Financial Services Commission of the state approved rate change proposal for many insurance companies. The commission’s report states that the average increase in insurance rates over first three quarters of 2009 were 6.2%.

According to a newspaper report, premiums may actually go up by average 9.1%, whereas Toronto alone will experience premium increase of about 14%. Insurance companies say the rates are rising because of rising rehabilitation and physiotherapy costs for accident victims.

A number of recommendations have been made to control the rising insurance costs. One such proposal states that minor injuries cover should be kept limited at $25,000. Government is making attempts to consider other proposals which will help strike an adequate balance between insurance affordability for drivers and protection.

There is still some time to go before the state budget is presented, and till that time people will have to struggle with fast increasing automobile insurance rates. About ten automobile insurance companies have already been allowed by the regulatory agency to increase their insurance rates in the last year. These companies cover about one fourth of Ontario automobile insurance market.

If one looks at some extreme examples, insurance premiums may increase by as much as 30% in some cases, depending on driving record, insurance company involved and community. In Greater Toronto alone, the average car insurance premium was $1682 in 2007, whereas now it has increased to $1917 in 2009. The Insurance Bureau of Canada says insurance premiums are calculated by factoring cost of claims and investment income generated after the premium is received. Other things that are factored include taxes, selling costs, overheads, account settlement costs and reserved funds.

Insurance companies are increasing auto insurance rates at an alarming rate. A woman was told to pay $500 more every year to get her Volvo S70 insured. She said, automobile insurance was no longer affordable which meant she couldn’t afford a car any longer. Insurance rate increases have become very common these days and are likely to cause a backlash from affected consumers. The responsibility completely lies on insured drivers according to an insurance company CEO. Insurance companies have been facing consistent cost increases, though no company asked for any rate increase earlier. Now the same companies are going to regulators asking for rate increase of about ten to twelve percent or even more.

Insurance companies have seen that the cost of injury claims increase about $300 for every vehicle, whereas average premium for automobile insurance decrease by about $100. Some insurance companies officials also blame authorities, saying the required changes that would have helped control cost have not been implemented. Insurance companies further say that the situation could have already been avoided with the help of another solution. It is also argued that an affordable automobile insurance product can be created by defining minor injuries and putting limits on amount to be paid. The current situation in which consumers are forced to pay five percent of their disposable income is deemed as unsustainable.

Comprehensives car cover average premiums have increase by more than five percent in the last three months whereas the annual rate for insurance cover is now increasing at 14%. Car insurance prices have seen a hike largely due to increase number of claims file. The most badly hurt would be loyal customers of insurance companies whereas new customers would still be offered discount to attract them.

It seems many customers are facing this problem since about 35000 people changing their insurance company every day. The frequently offered advice of shopping around has more become important than ever. Renewable insurance rates increase every year, since companies want to compensate for cheap deals struck by some one else. If the customer wants an inexpensive car insurance rate, they will have to search for it. Customers can reduce premiums by almost 30% if they simply compare competitive insurance quotes.