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07.10.2017 | Driving Advice

High Risk vs. Standard Insurance

Whether someone is buying automobile insurance in Ontario for the first time or is thinking about switching providers, it’s important they understand what their options are. After all, while no one ever wants to be in a situation where they need their policy, it would be far worse not to have one.

While many options exist, the two main versions of automobile insurance in Canada are standard and high risk.

What Is Standard Insurance?

A standard insurance policy is mandatory for all drivers in Ontario. This type of coverage can be broken down into three different sections:

Third-Party Liability Coverage

This type of coverage is required in case the policyholder gets into an accident that kills or injures another individual and/or damages someone else’s property. The policy would pay for any claims resulting from an ensuing lawsuit up to its limit. It would also cover the cost of settling any claims. The law states that every driver must have at least $200,000 worth of third-party liability coverage, but the policyholder can also elect to increase that amount.

Statutory Accident Benefits Coverage

This component of standard insurance covers the driver if they were injured in an accident, even if they were the one to cause it. The benefits would cover related expenses like:

  • Attendance Care
  • Caregiver Services
  • Income Replacement Benefits
  • Non-Earner Replacement Benefits
  • Rehabilitation
  • Supplementary Medical

Once again, if the driver wishes, they can increase their policy for most of these areas.

Direct Compensation – Property Damage Coverage

This coverage pays out when another person is responsible for damage to the policyholder’s vehicle or its contents. It also covers incidents that may not involve damage but do result in the vehicle becoming unusable.

However, the following conditions must be met for this policy to be applicable:

  • The accident must happen in Ontario
  • At least one other vehicle must have been involved in the accident
  • At least one other vehicle involved in the accident must also be insured by a company licensed in Ontario or has a special agreement through FSCO to offer this kind of coverage

If a policyholder is in an accident where these conditions are not met, they can use collision coverage if they have it. Otherwise, the only option is to pursue the responsible driver through the courts.

The reason this coverage is called “direct compensation” is because the insurance company pays out even though someone else is responsible.

What Is High Risk Insurance?

High risk insurance is the kind of coverage you need as a high risk driver. However, there is no one standard definition that every agency uses for this designation. For the most part, though, it refers to someone who has had multiple infractions on their record (e.g. tickets or accidents).

Usually, this means two accidents they were responsible for over the past 10 years, or two or three tickets over the course of a single year.

Any incident that involves impaired driving will also force the driver to carry high risk insurance automatically, regardless of what their record otherwise looks like.

Some insurance agencies will also consider a driver’s payment record. Therefore, missing a scheduled payment could mean the driver has to update their policy to high risk insurance.

Once someone is deemed a high risk driver, their insurance company may opt to cancel their policy. This is because high risk drivers are statistically more likely to end up filing claims.

When this happens, drivers must apply go to a non-standard insurance provider for their new policy. Driving without insurance is, of course, against the law and is punishable by a $5,000 fine and a sizable surcharge of roughly 20%.

How Long Do People Typically Stay on High Risk Insurance?

The good news is that the high risk designation doesn’t have to be permanent. Typically, an infraction will impact a driver’s insurance policy for three years starting from the day of the incident. More serious convictions can take up to five years.

In either case, if a driver is able to keep their record clean, they can expect to return to a standard policy once their initial infraction is no longer an issue.

How Many Ontarians Have High Risk Insurance?

Numbers are hard to come by, but according to the Road Safety Monitor, in 2006, more than 2 million Canadians drove aggressively. 2.7 million drivers admitted they regularly went above the speed limit with the vast majority doing it to get through a red light. Therefore, it’s safe to assume that high-risk drivers make up a significant part of the population.

How to Avoid High Risk Driving

The best thing a driver can do is simply avoid any infractions from showing up on their record. Obviously, the easiest way to do this is by practicing safe driving habits.

Here are some tips for safe driving :

  • Never drive when you’re drowsy
  • Never get behind the wheel if you’ve been drinking, even if you don’t feel impaired
  • Leave early to give yourself plenty of time to get to your destination
  • Avoid driving aggressively

Those who struggle with that last tip should consider signing up for defensive driving school. It’s not just for people who drive company cars. It can help private drivers avoid the need for high risk insurance.

However, it also means that a driver should never pay a ticket if they don’t believe they’re guilty. While it’s often more convenient to simply pay the fine and move on, doing so registers as an admission of guilt and could eventually make the driver look risky. If they’re able to fight the ticket and win, the driver’s record won’t include it and the incident can’t be held against them.

Be careful about demerit points, too. These don’t directly affect a driver’s insurance, but the infractions that cause them do. If a driver earns enough demerit points to have their license suspended, that will definitely put them in the high risk category, too.

Get a Free Quote Today

Drivers in Ontario should know that Easyway Insurance Brokers will provide them with a free quote if they’re interested in a new policy. Whether they’re high-risk drivers or not, we can help them pick the perfect policy for their unique needs.


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