You have just arrived in Toronto and have decided to buy a car to explore the city and its surroundings. You have obtained or exchanged your driver's license. You have spotted the car of your dreams at a good price, and you are ready to initiate the bank transfer...
STOP RIGHT THERE!
Before hitting the road, it is essential to understand how the automobile market and insurance work in Canada, especially in Toronto. Like everywhere else in the world, you can choose to buy a new or used car, and the pros and cons of buying a new vehicle remain applicable in Canada.
As a newcomer, you might be interested in used cars to keep your expenses limited in a country you are not yet fully familiar with.
Buying a used car comes with some bad news: the HST (Ontario's value-added tax) also applies to used vehicles. As a result, you will have to pay an additional 13% of the vehicle's Blue Book value during registration.
My advice: I strongly recommend purchasing a Carfax report to know the history of the car you are buying.
This report can reveal if the seller still owes money on the vehicle, and if they fail to disclose this, you could end up responsible for the remaining debt. Additionally, a Carfax report provides crucial information on past damages, from minor scratches to major accidents, helping you evaluate the car's value and potential insurance costs.
Automobile Insurance:
In Canada, having automobile insurance is mandatory for all vehicle owners. When living in Toronto, there are several key points to consider when purchasing insurance for your car. Compared to many other countries (including most of Europe), automobile insurance in Ontario is quite expensive, with basic coverage often costing $300 or more per month.
My advice: if possible, take your auto and home insurance from the same insurer. Most of them offer "bundles" that reduce the total price.
Types of Insurance:
Automobile insurance in Toronto, like the rest of Canada, includes several coverage options:
Liability Insurance: Mandatory, it protects others in case of an accident for which you are responsible.
Collision Insurance: Covers damages to your vehicle after a collision, even if you are at fault.
Comprehensive Insurance: Offers extended protection, including coverage for vandalism, theft, fire, floods, etc.
Loss of Use Insurance: Covers transportation expenses while your car is undergoing repairs after an accident.
An important thing to note: having a responsible accident will impact the amount of your insurance almost instantly and significantly (a friend saw her monthly payment increase from $240 to nearly $320).
If you are involved in a non-fault accident and you are not the cause of the collision (less than 25% responsibility), it is unlikely that your insurance will increase. Many people will tell you that your insurer will automatically raise your insurance premium when you call them to report a non-fault accident: this is false.
My advice: try to negotiate with your insurance for an "accident forgiveness" option. Having this option guarantees that you won't see the amount of your insurance skyrocket after the first responsible accident.
Factors Affecting Insurance Costs in Ontario and Toronto:
Driving History: This plays a major role in determining your insurance premium. This one doesn't play in favor of the newcomers, whose driving history is often not considered outside Canada and the USA.
My advice is to select an insurer based on their acceptation of your driving history. After negotiation, some insurers may consider your foreign driving history, significantly reducing your insurance costs.
For example, once my French driving history was considered by my insurer, my insurance premium decreased from $250 to $175.
Vehicle Type: The model, year of manufacture, and value of your car influence the insurance cost. High-end or recent cars may attract higher premiums due to higher repair costs. There are sometimes statistical anomalies, and certain car models may cost significantly less to insure than their equivalents in other brands.
My advice is to ask your insurer for a list of the least expensive vehicles (models and years) to insure, giving you all the information to make an informed decision.
Choice of Insurer: Toronto has numerous insurance companies offering various options. It is essential to compare offers to find the best coverage at the best price.
My advice is to use online insurance comparison tools (e.g., Ratehub.ca), but also make the effort to directly call insurers, as they may offer even more competitive rates.
Age: Like elsewhere, younger drivers are considered riskier by insurers, resulting in higher premiums. Unfortunately, there is little you can do about this factor.
Frequency and Distance of Driving: Driving frequently or covering long distances each day may lead to higher insurance premiums due to an increased risk of accidents.
Deductible: The amount of your deductible, which is the sum you have to pay out of pocket in case of a claim, can affect your insurance premium. Opting for a higher deductible can reduce the cost of your insurance.
In summary, buying a car and insuring it represents a significant expense for any newcomer. Mastering all the factors that can help you choose the right vehicle and insure it adequately is essential and can save you a considerable amount of money and provide peace of mind in the medium and long term.
Simple Relocate is your relocation partner in Toronto. We can assist you in acquiring a vehicle, getting insurance, and offer a multitude of other services to facilitate your settling in Ontario.
Simple Relocate is your relocation partner in Toronto. We can assist you in acquiring a vehicle, obtaining insurance, and providing a multitude of other services to facilitate your settlement in Ontario.
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