Best auto rates in Canada

Frasier Institute Report on provincial insurance

The recently released Frasier Institute report shows that there is only one province, Ontario, with an average insurance premium exceeding $1,000. It has been the belief of many that government-run automobile insurance companies such as British Columbia, Saskatchewan and Manitoba charged a lower overall premium.

Who pays the most?
The report shows that BC pays the highest average premium at $1,304 per year. Ontario came in second with an average premium of $1,229. Saskatchewan came in third at $1,063 followed by Manitoba at $1,029. The other provinces in order of highest to lowest are Alberta $959, New Brunswick $768, Nova Scotia $749, Quebec $719, Newfoundland & Labrador $703 and Prince Edward Island had the lowest average auto insurance premium at $701. Well, it does have the reputation as the "Peaceful Island".

How is the auto insurance sold?
The results are reflect that the governments sell the Public Liability and Property Damage (PLPD) coverage with the public sector insurance companies providing the excess auto coverage for collision, comprehensive and/or specified perils. In Quebec, the government sells just the minimum amount of PLPD and the public companies pick up the higher limits. The report recommends that Quebec’s government auto insurer be made accountable for its finances. These finances are said to be in serious long-term deficit.

Can this be improved?
Part of the report discusses the inefficiencies of government provided insurance. The private insurer can take profits from a lower claims year to subsidize the years of higher claims and also can invest lower claims years profits. The government provided insurance is often for set levels. These levels are often higher then the consumer would have taken if a choice had been given for a savings in premium. In British Columbia, Manitoba and Saskatchewan the government monopolies occupy 95-98% of the market.

What does the driver want?
Auto insurance should be about choice. The well-informed consumer looks at the choices available and weighs the risk. Most private agents and brokers will recommend a minimum of $2 million PLPD but many drivers will proceed with $1 million or less.

Report conclusions
The report also recommended that consumers in British Columbia, Manitoba and Saskatchewan would be better served by an appropriately regulated market. This market is where auto insurance is obtained from private sector insurers operating in competition with each other.

To view the complete report, "Personal Cost and Affordability of Automobile Insurance in Canada (2008 edition)", click here.

The insurance answer
So not all rates are alike and not all claim payouts are alike. Some provinces have capped the payouts on minor injuries.

Saskatchewan and Manitoba have no-fault systems that stop you from suing for pain and suffering. You can opt into the tort option in Saskatchewan but you will still face a deductible.

The long and short of it is that your insurance is as good as you make it. Understand your options, talk to your agent or broker and research what you are buying.