Why does car insurance cost more here than in the U.S.?

Eric Lai answers readers? auto questions every week for Wheels.

Q: I am a U.S. citizen immigrating to Ontario shortly. I know there are importing costs, duty, registration and licensing costs to bring my 2001 Saturn with me, but what I can?t understand is why Ontario auto insurance is so expensive.

I?m a 25-year-old female, licensed and insured in Pennsylvania for nine years without a single accident or moving violation. I pay about $60 a month for auto insurance. In Ontario, the cheapest I found, from CAA with winter tire discount, is $131 a month.

I?ll only use the car for pleasure (e.g. going to and from Pennsylvania to see family), but a monthly transit pass to commute to work is over $120, so it doesn?t seem cost effective to pay for both car insurance and a transit pass.

However, if I commute by car, I?m sure the insurance cost would go up, as well as parking and gas bills.

Is this the best deal Ontario insurers can offer me? Aren?t I a profile of exactly what an insurable driver looks like?

A: Insurance Bureau of Canada spokesperson Steve Kee replies:

The systems are different. Moving to the GTA from Pennsylvania will be more expensive. The cost of living and services here are higher than in the U.S.

There are also some things we don?t know, such as, did she live at home, was she covered under a multi-vehicle or multi-product discount?

Also, was she covered by a U.S. company that writes policies in Canada? If so, perhaps that would help.

The overall products are different as well. We have higher rates because we get more.

Optional coverage in Pennsylvania like protection against uninsured motorists, loss of income, and funeral benefits, are part of our standard policies. Also, payout limits in Pennsylvania are lower. For example, medical rehab is $5,000 there vs. $50,000 here, bodily injury coverage is $15,000 there vs. $200,000 here.

While there are higher costs for auto insurance in Ontario, the products are not the same.

Eric Lai adds:

A 2011 Fraser Institute study found that Ontario had the highest auto insurance rates in Canada with $1,231 average annual premium. Quebec had the lowest rates with a $642 average annual premium.
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