High risk auto insurance, also known as non-standard insurance, is a category of coverage for drivers deemed more likely to file a claim or be involved in an accident. In Canada, drivers may be classified as high risk due to multiple traffic convictions, at-fault accidents, serious driving offences like impaired driving, or policy cancellations for non-payment. This classification often results in significantly higher premiums and can limit access to standard insurance markets, making it a critical financial and legal consideration for affected drivers. Understanding how high risk insurance works, the role of the Facility Association, and the path to regaining standard status is essential for maintaining legal coverage on Canadian roads.
What Defines a High Risk Driver in Canada
Insurance companies in Canada classify a driver as high risk when their statistical likelihood of making a claim is higher than average. This assessment is based on a driver's history and specific risk-related characteristics. Common factors include having multiple at-fault accidents resulting in insurance claims within a recent period, such as over two within three years. A poor driving record with numerous traffic convictions, tickets, and fines is another primary indicator. Serious driving convictions, including criminal offences like impaired driving (DUI) or reckless driving, will almost certainly lead to a high risk designation. Other circumstances can also place a driver in the non-standard market. Policy cancellations due to missed payments over several months, known as non-pay cancellations, are a significant red flag for insurers. Convictions arising from insurance fraud or misrepresentation also result in a high risk label. Demographic factors, such as being a very young driver with little experience or a senior driver, can contribute to a higher risk assessment, especially when combined with other infractions. It is important to understand that each insurance company rates claims and convictions differently, but the general thresholds for entering the high risk market are well-established. For example, having two non-pay cancellations within three years could lead an insurer to decline to even provide a quote.
How High Risk Insurance Functions and Its Costs
High risk auto insurance functions similarly to standard policies in that it provides the mandatory coverage to make a vehicle legally operable on public roadways. However, it differs in three key criteria that directly impact the policyholder. First, the insurance will cost significantly more, with premiums often ranging from $5,000 to $20,000 higher than standard market rates. The exact cost depends on factors like the driver's age, location, vehicle make and model, and the specific details of their driving history. For example, a single careless driving conviction can push annual premiums for a profile in Toronto to nearly $10,000. Second, payment options are often reduced because many drivers are in the high risk category due to previous cancellations for non-payment. Insurers mitigate their risk by limiting flexible payment plans. Third, insurance coverage itself may be limited or come with stricter terms. Liability limits may be capped at mandatory minimums, and drivers are typically required to pay higher deductibles for collision and comprehensive coverage. In some severe cases, an insurer may decline to offer collision coverage altogether, which presents a problem if the vehicle is leased or financed, as those entities usually require it. The table below illustrates how sample premiums can increase based on different violations for a specific driver profile in Ontario, based on a 30-year-old male in Toronto driving a 2023 Toyota Corolla with standard coverage.
These costs underscore the financial impact of a high risk designation. Drivers must work with a licensed broker to access this market, as most standard insurers like Aviva, Economical, Intact, Desjardins, and Cooperators typically cater to drivers with minimal convictions or claims history. The deductible, which is the amount paid out-of-pocket before insurance covers a claim, is a key cost factor. Choosing a higher deductible can lower the premium but increases personal financial responsibility in the event of a claim.
The Facility Association as the Last Resort
When standard insurance companies decline to issue a new policy or renew an existing one, and non-standard specialists also deny coverage, Canadian drivers must turn to the Facility Association. The Facility Association is an insurer of last resort that guarantees coverage for eligible drivers who cannot obtain insurance elsewhere. It is often the most expensive car insurance a driver will ever purchase, but it fulfills the legal requirement to be insured. To purchase insurance from the Facility Association, a driver must work with a licensed insurance broker or agent. The broker's role is to first shop the market among non-standard providers. If no company agrees to provide coverage, the broker will then place the driver with the Facility Association. This process ensures that all drivers, regardless of their risk profile, have a pathway to obtaining the mandatory auto insurance required by law in every province and territory. The coverage provided meets provincial minimum requirements, such as $200,000 in liability in Ontario and British Columbia or $500,000 in Nova Scotia, though it comes at a premium that reflects the high risk nature of the pool. This system acts as a safety net within the Canadian auto insurance framework, and brokers are the essential conduit for accessing it.
Specific Rules for Young Drivers and Claims History
Young drivers, particularly those with a G2 licence, face unique challenges and can be pushed into the high risk market more easily than experienced drivers. Insurance companies often rate convictions for young or novice drivers more severely than for full G class licence holders. A single ticket or at-fault claim can cause their premiums to increase dramatically, potentially moving them from the standard market to the non-standard market. This heightened sensitivity is due to the statistical correlation between inexperience and a higher likelihood of accidents. Furthermore, the accuracy of a driver's claims history is critical for obtaining a correct quote. Insurance brokers must rate policies based on the official Motor Vehicle Record report. Sometimes claims are recorded incorrectly, which can unfairly penalize a driver. To correct this, a broker may request a Letter of Experience from a previous insurer. This standard letter lists all claims, both at-fault and not-at-fault, that the insurer has on file for the driver. Providing this document allows the broker to ensure the new quote accurately reflects the driver's true history, preventing incorrect rating that could lead to policy amendments or a declined application later.
The Path to Lower Risk and Standard Insurance
The high risk label is not permanent, and drivers can work towards improving their status and lowering their premiums over time. The rehabilitation timeline depends entirely on the severity and nature of the infractions on a driver's record. Most minor traffic tickets, licence suspensions, or policy cancellations will be removed from an insurance record after three years. However, more serious incidents like at-fault accidents and criminal driving convictions, such as impaired driving, can impact insurance rates for up to six years. In some extreme cases, certain convictions can affect a driver's status for much longer, with some sources noting it can take up to 20 years to stop being labelled high risk, though significant rate improvement is typically seen in 3 to 6 years with a clean record. Insurance brokers often help clients build a rehabilitation plan to return to standard rates. The most effective way to lower your premium is to maintain a clean driving record for several years. Consistently carrying insurance and driving safely proves to providers that your risk has decreased. Other strategies to reduce costs include taking advantage of any available discounts, such as those for winter tires, bundling with home insurance, or enrolling in telematics tracking programs. Increasing your deductible can also lower your premium, as it reduces the insurer's potential payout. The key steps in the rehabilitation process are as follows.
- Drive safely and avoid any new traffic violations or at-fault accidents, including risky behaviours like stunt driving.
- Pay all insurance premiums on time without lapse to rebuild a reliable payment history.
- Work with your broker to monitor when old tickets fall off your record and demerit points expire.
- Ask your broker to proactively re-quote you with standard insurers as your record improves.
- Explore all applicable discounts to reduce your current high risk premium.
- Consider higher deductibles if financially feasible to lower monthly costs.
In some cases, it can take many years to stop being labelled a high-risk driver. Depending on your accident and claim history, you can see significant improvement in your auto insurance rates in three to six years. Typically, a driving infraction or ticket will stay on your record for three years. Brokers who specialize in high risk insurance monitor your auto policy and look for opportunities for improvement. Once your situation allows, they will assist you in returning to the standard market.
Provincial Regulations and Legal Requirements
Auto insurance in Canada is provincially regulated, meaning the specific rules, mandatory coverages, and minimum limits vary by province. However, the fundamental legal requirement to have valid insurance applies nationwide. All drivers must carry at least the minimum liability coverage mandated by their province of residence. For instance, drivers in British Columbia and Ontario must have a minimum of $200,000 in third-party liability coverage. In contrast, Nova Scotia requires a minimum of $500,000. These minimums form the base of any high risk policy, though insurers may cap limits at these amounts for higher-risk clients. Driving without insurance carries severe penalties across Canada, including heavy fines, licence suspensions, and vehicle impoundment. For high risk drivers, maintaining continuous insurance is particularly crucial, as a lapse in coverage can further complicate their ability to obtain future insurance and extend their time in the non-standard market. Beyond the legal consequences, insurance is a critical financial protection. Causing an accident without insurance could leave a driver personally responsible for tens of thousands of dollars in medical bills, legal fees, and repair costs, creating a significant financial burden. In Canada, there are approximately 160,000 car accidents each year, highlighting the ever-present risk.
Working with Brokers and Non-Standard Providers
Obtaining high risk insurance in Canada almost always requires the assistance of a licensed insurance broker. Brokers have access to markets and providers that individual consumers cannot approach directly. They specialize in understanding which non-standard insurance companies are best suited for different types of risk profiles. Key non-standard market carriers in Canada include Pafco, Jevco, Coachman, and Echelon. These companies specialize in insuring higher-risk drivers. A broker's role is to compare quotes from these and other providers, including the Facility Association, to find the most appropriate and affordable coverage for their client. They also help ensure all information is disclosed and rated correctly. This is vital because inaccuracies on a Motor Vehicle Record or claims history can lead to incorrect quotes, policy amendments, or even a decline in coverage. Brokers may request a Letter of Experience from a previous insurer to verify claims history. Furthermore, a good broker will not just place a policy but will also guide the driver through their rehabilitation, monitoring their record and advocating for their return to the standard market when possible. Many brokerage firms have dedicated teams or long-standing relationships with non-standard providers, which can help in finding competitive rates even within the high risk segment. These brokers act as intermediaries who shop the market on the driver's behalf, a necessary step since high risk insurance cannot be purchased directly by the consumer from the Facility Association or many specialty insurers.
Common Mistakes and How to Avoid Them
Several common mistakes can worsen the situation for drivers seeking or holding high risk insurance. A primary error is failing to fully disclose all relevant information about convictions, accidents, or past policy cancellations to an insurance broker. Since brokers rate policies based on official reports, undisclosed information discovered later can lead to a policy amendment with a higher premium or even a cancellation for misrepresentation. Another mistake is allowing insurance to lapse or being cancelled for non-payment, which creates a new major negative mark on an insurance record and extends the time a driver is considered high risk. Drivers sometimes also assume the high risk label is permanent and do not actively work with their broker on a rehabilitation plan. Not asking a broker about potential discounts, such as for winter tires, bundling, or telematics programs, is another missed opportunity to reduce costs. Finally, some drivers may not verify the accuracy of their claims history, potentially paying for mistakes on their record. To avoid these pitfalls, always provide complete information to your broker, prioritize paying premiums on time, discuss a clear timeline for record improvement, inquire about all possible discounts, and request a review of your Motor Vehicle Record and a Letter of Experience if quotes seem inconsistent with your history.
Frequently asked questions
How long does a high risk insurance classification last in Canada?
The duration varies by the severity of the infraction. Most minor traffic tickets, policy cancellations, or licence suspensions will fall off your insurance record after three years. More serious incidents, such as at-fault accidents and criminal driving convictions like impaired driving (DUI), can affect your insurance rates and risk classification for up to six years. Demerit points may also remain for six years. Maintaining a clean record is the only way to reduce the time you are considered high risk, with significant improvement often seen in 3 to 6 years.
What is the most expensive high risk auto insurance option?
The most expensive option is typically insurance obtained through the Facility Association, which is the insurer of last resort in Canada. When no standard or non-standard insurance company will offer coverage, the Facility Association guarantees a policy. Premiums through this channel are generally the highest a driver will pay, often cited as being significantly more costly than other non-standard market policies. This coverage is placed by a licensed broker after they have exhausted all other market options.
Can I get car insurance with multiple speeding tickets?
Yes, but you will likely need to seek coverage from the non-standard, high risk insurance market. Multiple speeding tickets, especially within a short period, signal a pattern of risky behaviour to insurers. While you may still get coverage from non-standard specialists like Jevco or Pafco, your premiums will be substantially higher than those for a driver with a clean record. The exact impact depends on the number and severity of the tickets. A broker can shop the non-standard market to find a provider willing to insure you.
What is the difference between standard and non-standard auto insurance?
Standard auto insurance is designed for the average driver with a clean driving record and is offered by companies like Aviva or Economical. Non-standard insurance, also called high risk insurance, is a category for drivers deemed more likely to file a claim. It is provided by non-standard market carriers like Pafco or Jevco for drivers who do not qualify for standard policies. Non-standard policies are generally much more expensive than average car insurance rates. These policies may have reduced payment options and can come with coverage limitations like capped liability limits or higher mandatory deductibles.
How can I lower my high risk auto insurance premiums?
The most effective method is to drive safely and avoid any new violations or at-fault claims for several years to improve your record. You can also ask your broker about available discounts, such as those for winter tires, bundling policies, or telematics programs. Opting for a higher deductible can lower your premium, though it means paying more out-of-pocket if you make a claim. Finally, work with your broker to regularly review your policy and shop for better rates as your record improves, and ensure all information on your record is accurate.
Is high risk auto insurance mandatory if I have a poor driving record?
Yes, if you wish to legally operate a vehicle on public roads in Canada, you must have valid auto insurance. If your driving record is poor enough that standard insurers decline to cover you, you are legally obligated to seek insurance from the non-standard market or, as a last resort, the Facility Association. Driving without insurance can result in severe penalties like fines, licence suspension, and vehicle impoundment. Furthermore, maintaining insurance is necessary to eventually rebuild your driving history and return to standard rates.
Sources and further reading
- Compare high-risk auto insurance quotes in Canada ratehub.ca
- High Risk Insurance Quotes & Coverage brokerlink.ca
- High Risk Car/Auto Insurance Ontario excaliburinsurance.ca
- High-Risk Auto Insurance | My Hunter myhunter.ca
- High-Risk Car Insurance | Easyway Insurance easywayinsurance.ca
This article explains how things work and is not financial, tax or legal advice. Rules, limits and rates change, so check the current figures with the Canada Revenue Agency, your province or your financial institution before you act.