Don’t allow misleading top 10 ‘worst’ and ‘best’ lists fool you about auto-insurance rates
Political parties have done little to curb premiums, writes Lorraine Sommerfeld.
Right now, in most of Canada, car insurance rates continue to rise like a giant pan of Jiffy Pop stuck in the fire.
Political parties roll into power promising to clean up the mess made by the other guys, only to find the mess has been so long in the making, at some point their own party has been part of the problem. So they stumble away from an epic issue with un-sexy solutions and hope consumers will forget.
According to the Insurance Bureau of Canada, fraud is costing Canadians billions of dollars every year. It’s “an illegal, organized big business, largely unknown to consumers, that siphons resources away from our health-care system, ties up our emergency services and courts, and drives up insurance costs,” the organization writes.
A study out from Lowestrates. ca doesn’t even try to pretty up the punch: “The report found rates are up across Ontario, Alberta and Atlantic Canada in the second quarter of 2019, with drivers in Alberta seeing the steepest increase in the country — rates there rose 16.20 per cent in the past year.” Ouch.
Many of the provinces with a government-run program (British Columbia, Saskatchewan and Manitoba) offer a basic product that meets minimum requirements. But like those cheap airline tickets you get online, they work until they don’t — and you find out the hard way. Basic coverage doesn’t go very far if injuries are substantial, lawsuits get initiated or property damage is high.
Not only is fraud still out of control, as we get increasingly litigious, too much money is ending up in lawyers’ pockets that should be going directly to injured drivers.
When it all seems like bad news, some studies try to measure something more upbeat: Insurancehotline.com is another online insurance quote-checker, but instead of delivering the bad news on current rates skyrocketing, it instead compared cities in Ontario. Brampton has the highest auto rates in Ontario, yet it’s on the top 10 list of best cities. What?!
It turns out this study measures self-reported tickets, not claims paid out (which is the largest factor in determining rates). These 10 “best” and “worst” cities have little to do with insurance rates. Don’t be fooled.
Brampton may be on that “best” list, but as another online insurance entity, Kanetix.ca, points out, “Some neighbourhoods and cities cost more to obtain insurance in, especially in more densely populated areas, due to the number of claims that happen there — whether its local collisions or elaborate examples of fraud.” Read past the headlines.
Many of us thought all those fancy life-saving, crash-averting safety systems we pay so much for should start to drive our premiums down. But instead, because those systems themselves are so expensive to fix, insurance premiums keep going up. A side mirror is no longer just a side mirror — it’s a tech-laden lane-avoidance system that costs thousands to replace.
For years I’ve heard the same advice: raise your deductible, get rid of collision coverage, bundle your policies. I’ve done all that, and still my premiums rise. It’s understandable that living in a more densely populated area will mean higher rates because of the higher and more frequent payouts for claims.
But if fraud is gobbling up nearly $250 of my annual premium, then it’s clear we need to elect leaders with the political will to rein in rampant fraud.