No tickets, no at-faults – 10 reasons your rates can go up anyway

Everybody understands that when they have an at-fault accident or a speeding ticket, their auto insurance premiums are going to go up. The reality is your premiums can go up for lots of other reasons too, including moving, changing cars, or just because claims have gone up in your area.

Most of us understand that auto insurance is priced based on how likely the insurance company thinks we are to make a claim. In that sense, we understand that if we have a past record of getting into accidents, that makes it more likely that we’ll get into more accidents in the future. That just feels right to most of us, but it’s also supported by statistics. Likewise, if we have a record of not following the rules of the road, it’s not hard to imagine how that makes us more inclined to have an accident, make a claim, and add costs to the insurance system. So, few of us think it’s unusual to pay more for auto insurance if we have a couple of speeding tickets on our record, or worse, maybe a DUI. Again, statistics show the connection between past tickets and future claims. But what about when your auto insurance premium seems to go up for no reason at all? The easy and popular explanation is that the insurance company is just padding their profits. But in a highly-regulated jurisdiction like Ontario, insurers need to justify every increase to the FSRA, so that can’t be it. The fact is that there are lots of legitimate reasons your rate could go up, even if you don’t have any new tickets or at-fault accidents on your record. Most are related to increased risk based on a change in one or more insurance rating factors. Others have to do with losing discounts that we might not have known we were getting.

You’re most likely to be shocked by a premium increase when it comes with your renewal, because often nothing has changed in your circumstances, your vehicle, or your driving record, and yet you might see an increase in your premium of 10% or more in some years. Here are a couple of reasons why that might happen:

Auto insurance claims costs across Ontario were fairly steady between 2002 and 2017, and that led to premiums that more or less kept up with inflation and no more. From 2018 until the pandemic hit in 2020, claims costs rose quite dramatically, and with them, premiums. Several factors contributed to the increase, including an increase in distracted driving, and increased auto repair costs related to new vehicle safety technology (sensors, cameras etc.). Since the pandemic began, fewer drivers on the road has meant fewer accidents, and lower claims costs. This has been reflected in premiums. Some insurers have even sent rebate cheques to their customers. These larger social and behavioural trends make claims costs highly variable from year to year. Given that inflation only goes in one direction, that usually means that in a given year, even with no new tickets or at-faults, your premiums could increase by 1-10%.

One of the rating variables used to arrive at a premium is where you live. The insurance company tracks claims costs overall, but also by postal code. If claims costs went up recently in your area, then it is possible that your premium could go up by the same percentage, sometimes by as much as 10%. Though inflation makes it less likely that claims costs in your area would go down, if that happens, then you would reap the equivalent savings.

When you call or email your broker to update something on your policy, like swapping out a vehicle for a new one, moving or adding a driver, it will affect your premium, and the broker should explain exactly how. (Note: Depending on timing, the cost impact of mid-policy changes might look worse than it actually is. E.g., if you pay $100/month, have 5 months left in your policy, and make a change that results in a 5% increase, your next payment may be more than $105, because your insurer will spread the increase over however many payments are remaining on the policy.)

As mentioned above, insurance companies use your postal code to adjust your premium based on the relative frequency and cost of claims in your area. It’s well-known that certain cities pay more than others, but even if you move within the same city, even 2 blocks away, your rate could go up by as much as 20%. Keep in mind that depending on where you’re moving to and where you’re moving from, your rate could also go down by the same amount.

The car you drive can affect the premium you pay quite dramatically. Again, insurance companies keep statistics on how much they spend in claims on particular vehicles. Some vehicles may be popular targets for car thieves. Some don’t seem to protect their passengers as well in an accident, leading to more severe injuries, and more costly claims. All this is factored in when setting your premium. So if you change from a vehicle with a good claims history (fewer claims, cheaper claims) to one with a worse claims history, you might pay as much as 40% more. Again, your rate could go down if the opposite is true.

Most insurance companies offer a discount when you have more than one car on your policy. It’s called a multi-vehicle discount. If you had two cars on your policy and decide to take one off, that could increase your premium on the remaining car by up to 15%. This is a case of “You don’t know what you got ‘til it’s gone”, because you might have been benefiting from the discount for years without knowing it, and you only learn about the savings when they’re taken away.

This is very similar to the multi-vehicle discount. Most companies also offer what they call a multi-line (bundle) discount. This discount is for having multiple lines of insurance with the same company. Auto is a line of insurance, as is home, as are motorcycle and cottage. So if you have auto insurance and another kind of insurance with the same company, you could be saving as much as 15%. If you decide to move your other insurance to a separate company, or say if you no longer need that insurance at all, then you would lose the discount, and pay up to 15% more for your auto insurance.

All licensed drivers (G2 or G) in your home need to have insurance. If your son or daughter gets their G2, your insurance company will expect you to either:

Depending on how much you’re already paying and whether your child has driver training, this could add at least 50% or more to your total premium. If your children are away at college or university, you should be getting some kind of “away at school” discount in recognition of the fact that they cannot drive your car while in another city. But then if they move back home, they would have to go back on your policy, unless you can prove that they have their own insurance.

If you opt-in to a telematics program whereby an insurance company app tracks your driving, and your driving is determined to be unsafe, you could be subject to a surcharge of up to 10%. Surcharging based on telematics was not allowed in Ontario prior to November 2020, but now, your insurer is allowed to surcharge for risky driving behaviour like speeding etc. The upside is that telematics offers a financial incentive to drive safely, and most drivers using UBI actually save 10% or more on their premiums. The maximum discount is 25%.

When you’re going through the end of a long-term relationship, probably the last thing you want piled onto your list of problems is a bigger insurance bill. But yes, relationship status is a rating variable that some insurance companies use to predict the risk of future claims. Single or divorced people are statistically more likely to get in an accident, and you could pay up to 5% more if you decide to untie the knot.

Often if you change insurance companies, it’s because you’re unhappy with your current company’s rates. Although it is very possible that you’ll get a better overall rate by changing insurers, all of the factors listed above (plus at-fault claims and tickets) still follow you when you get a policy with a different company. If you switch to a car with a bad claims record, and move to a postal code with a bad claims record, different companies might rate those changes slightly differently, but generally, they will all charge higher premiums as your risk factors go up. Likewise, if you don’t bring other vehicles, or your home or motorcycle insurance, over to the new company, they won’t offer you multi-car or multi-line discounts.

It’s very rare that this would happen to someone with a clean driving record, but it is possible that you could need to change insurers because you got cancelled by your insurance company, either for misrepresentation (lying) or for non-payment of premiums. If this happens, you’ll need to get coverage with a high-risk insurer, and your new premium will be at least double your old rate.

All of the above are legitimate reasons why your rate could go up. If you have a combination of factors, that could add up to quite a shock. Say you got divorced, lost your multi-vehicle discount, moved into the city and got a new car. And say that claims costs in general are rising. It’s not at all inconceivable that your annual premium could go up by 25% or more over a very short period of time. Whether you see a big jump in your premium mid-policy or at renewal time, it’s never a bad idea to call one of our helpful and knowledgeable brokers at Mitch. We work with 40+ insurance companies. Yes, your rating factors may have taken a hit, but there’s probably an insurer out there trying to attract customers just like you. Your rate may still go up a bit, but we might be able to turn a 20% increase into a 2% increase. If the rate is still more than you can comfortably afford, our brokers will leave no stone unturned to get you the best possible deal. Special thanks to Alex Gemmiti, Ian Mewhinney, and Lyndsey Dewdney for their contributions to this article.