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.

The revolution that came from uSwitch.com report, that more and more adults are using their parents’ insurance policies, is no news at all for most of the parents. In some cases, they are buying insurance cover for their older children simply because the young adults are main driver of the car. If the insurance cover continued to be in the name of parents, it would have been illegal and insurance company could even refuse to pay the claim in the case of an accident.

In the face of rising costs, people can still find some creative ways of saving on insurance rates. The premiums for third party fire and theft are still lower than other comprehensive insurance covers. This strategy usually works when you are driving an older vehicle.

The type of car being driven on the road by you, is the single biggest factor which decides your car insurance premium. Insurance companies believe, if your car engine is on the smaller side, the drivers are at less risk of an accident. Obviously, if you are buying a sports car with a powerful engine, you would be tempted to drive faster thereby increasing chances of car crash. It’s best to go for a smaller engine if you are a new driver. In this way, you can build up your driving record (keep it as clean as possible). If you buy a powerful sports car later, insurance companies would accept your clean driving record and offer you reduced insurance rates.

If you are taking proper precautions such as fitting your car with alarm and park it off the road at night, insurance companies will reduce your insurance rates. Try to make an upfront payment instead of paying monthly premiums. Monthly premiums are like financial agreements in which the insurance companies’ would be charging you interest rates along with the one time premium that you would otherwise have paid.