Does Car Insurance Include HST?

5 minute read Published on Nov 2, 2022 by BrokerLink Communications

Auto Insurance Policy: HST and Accident Claims

If you’ve never purchased car insurance in Ontario before, then you may be wondering if you need to pay tax on it. Below, we answer your questions about whether car insurance is taxed in Canada and which taxes it is subject to.

Are drivers required to pay harmonized sales tax (HST) on auto insurance?

No, HST (harmonized sales tax) is not charged on car insurance in Ontario. Though Ontario residents may be used to most sales being subject to HST, car insurance is exempt.

Are drivers required to pay Ontario federal goods and service tax (GST) on auto insurance?

No, once again, car insurance premiums are exempt from all kinds of taxes in Ontario, including HST and GST. Therefore, there are no taxes levied whatsoever on auto insurance in Ontario.

Is there tax on commercial auto insurance in Ontario?

No, there is no tax on commercial auto insurance in Ontario.

What tax is charged on car insurance premiums in Ontario?

As it stands, there are no taxes that apply to car insurance sales in the province of Ontario.

Why is auto insurance in Ontario exempt from all taxes?

The reason that car insurance in Canada is exempt from taxes, such as HST and GST, is that insurance premiums are categorized as financial services, which are not taxable in any category of taxes for Ontario.

Tips for buying car insurance

Many people are confused about the process of buying car insurance, including what coverage they need or whether sales tax applies to auto insurance premiums. The experts at BrokerLink have put together a list of tips to help make buying car insurance easier than ever before:

Always be honest

Never lie or omit the truth on a car insurance application. For example, someone might be inclined to give a fake address or lie about other family members using their vehicle in an effort to qualify for a cheaper rate. However, if the insurance company finds out that you provided false or misleading information on your application, they could cancel your policy. A cancelled or non-renewed policy can have serious consequences, making it more difficult and expensive for you to obtain car insurance in the future.

Read through your policy carefully

Car insurance policies are legally binding contracts, so before you sign, make sure you have read it through thoroughly and are satisfied with the terms. Your policy will outline the coverage you are entitled to as well as the penalties you can face in various circumstances. Make sure you understand each. If you have questions about your policy, contact an experienced insurance broker.

Remember that not all insurance providers are the same

Insurance companies in Canada are not all the same. They have different policy options, coverage terms, and methodologies for calculating premiums. Therefore, a quote from one insurance company isn’t necessarily going to be the same as another.

For this reason, before purchasing auto insurance, make sure to shop around and obtain quotes from multiple insurers. BrokerLink can help with this process by reaching out to Canada’s top insurance companies on your behalf and comparing quotes to find you the best rate.

Don’t hesitate to ask questions

Insurance policies can be complicated so don’t hesitate to ask questions. If you do not understand part of your policy or believe your insurer has made a mistake, set up a meeting for clarity. For example, if your rates went up upon renewal, find out why.

Keep your insurance company up to date

If your circumstances change, whether you recently passed the G2 road test, moved to a new neighbourhood, or bought a new car, make sure to notify your insurance company. Since car insurance is dependent on many factors, any changes in circumstance could affect your rates.

Keep in mind that your existing coverage is based on the information you supplied when you first submitted your application, and therefore, you may not be covered by your insurance provider if something changes and you’ve failed to inform them.

Research the ins and outs of car insurance

Being knowledgeable about car insurance can help you when buying it. For example, before obtaining a quote, research what factors impact premiums and what incidents can raise or lower your premiums in the future.

How much does car insurance cost in Canada?

The cost of car insurance varies in Canada. Insurance companies consider all kinds of factors, from a driver’s age to their location, when calculating auto insurance rates. Therefore, the best way to find out how much car insurance will cost you is to contact an experienced brokerage like BrokerLink and request a free quote. Please note that since auto insurance is not subject to HST or GST, the price an insurance company quotes you will be the price. There are no additional fees to budget for.

Factors that influence car insurance costs

Many factors influence car insurance costs in Canada. We provide a list of these factors below:

  • Age
  • Location
  • Local laws
  • How you use your vehicle
  • Annual mileage
  • Make, model, and year of vehicle
  • Gender
  • Duration of vehicle ownership
  • Marital status

Driving history matters

One of the biggest factors impacting auto insurance rates is one’s driving record. Having a clean driving record can lead to better rates. A clean record is one that is free from tickets, accidents, claims, and other infractions, such as DUIs.

Oppositely, a driver with a record full of claims is usually more likely to pay a higher premium. If their record is especially poor, they may even be deemed a high risk driver, making it difficult to obtain car insurance. Therefore, a motorist’s driving record is one of the most important factors when it comes to auto insurance rates in Canada.

Similarly, driving experience also matters, which is the second component of one’s driving history. Driving experience is the amount of experience you have on the road. New drivers tend to have the least experience, which is why drivers under the age of 25 usually have the highest premiums. From an insurance company’s perspective, risk and driving experience are related. The less experience you have, the more likely you are to get into an accident, and the riskier you are.

How to save money on auto insurance

Never pay more than you have to for auto insurance by taking advantage of the following money-saving tips. From bundling insurance policies to enrolling in driving school, check out these BrokerLink-approved tips for getting cheap car insurance:

  • Purchase car insurance for multiple vehicles together (savings of up to 20%)
  • Buy multiple insurance policies (business insurance + car insurance, leisure vehicle insurance + car insurance, etc.) from the same company (savings of up to 15%)
  • Increase your deductible
  • Enrol in driving school (for young drivers)
  • Pay auto insurance annually rather than monthly
  • Install winter tires on your car (savings of up to 5%, depending on the province)
  • Purchase an eco-friendly vehicle (e.g. a hybrid or electric vehicle)
  • Maintain a clean driving record to be eligible for a safe driver discount

Find out more about car insurance by contacting BrokerLink today

Still have questions about taxes and car insurance in Ontario? Get in touch with BrokerLink. One of our knowledgeable and friendly insurance advisors will be happy to answer your questions plus, they can help you shop for a new policy to ensure you’re getting a great rate. If comprehensive coverage at an affordable price is what you’re after, working with an insurance broker is for you.

Canadian residents can contact BrokerLink by phone or email. You can also visit us in person at one of our many locations across Canada. In addition, to request a free quote, use our online quote tool and you will receive an accurate and competitive insurance quote in minutes. We look forward to hearing from you!

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