Pay-as-you-go or traditional rates? Toronto drivers weigh insurance options as gas costs climb

Amid rising gas prices, Toronto residents are feeling the pinch and debating how to cut insurance costs.

On Thursday, gas prices dropped by 10 cents to $1.639 per litre – a significant decrease, but still a hefty price for those trying to go from one destination to another by car.Pay-as-you-go or traditional rates? Toronto drivers weigh insurance options as gas costs climb

Because of that, Torontonians are reconsidering their driving plans, whether by taking the Toronto Transit Commission (TTC) or walking more.

LowestRates.ca licensed insurance broker Steven Harris suggested two options: pay-as-you-go coverage, where you pay insurance based on the number of kilometres you drive or if you have low mileage, and usage-based coverage, where the insurance rate depends on driving behaviour such as braking, acceleration, speed, and the time of day you drive.

With the higher gas prices, Now Toronto asked Torontonians if they would consider switching their insurance.

How are Torontonians feeling?

Toronto resident Jillian L. returned from a European trip just one day prior, and seeing the difference in gas prices between the cities shocked her.

“I was just in the Netherlands yesterday, and my cousin who picked me up from the airport was talking about the expense of gas prices. She said it’s essentially 2.45 euros, which is almost $4 CAD,” she told Now Toronto.

Despite the higher cost, she justifies that the Netherlands has everything nearby and biking is more accessible.

“But here in Toronto, gas prices are very high, and I think Canadians feel it a lot more because we’re dependent on our cars to get to work and get to family,” Jillian said.

She said that even in a large city like Toronto, she tries to limit car usage to only when necessary.

“I think very carefully before pulling up my car,” she said.

Jillian believes pay-as-you-go insurance or usage-based insurance could be helpful.

“I think, if you’re a safe driver, and you’ve been a safe driver for most of your life, that should also keep your insurance way up lower,” Jillian said.

Toronto resident Cliff F. agrees that safe drivers and those who drive less should pay lower insurance premiums.

As a downtown resident, he takes the TTC when he can, but for further distances, it gets hard.

“Whenever I have to drive, I can’t avoid it,” Cliff said.

But Toronto resident Jonah K. drives “just as much” and isn’t looking for ways to cut costs.

He also believes pay-as-you-go insurance, which charges based on distance driven, could be more harmful to drivers.

“If you get an accident, you’re still gonna get in an accident. I don’t think insurance should be privatized in the first place, if it’s government-mandated. But yeah, I think everybody’s paying too much for insurance, but the flat rate makes sense to me,” Jonah told Now Toronto.

Expert advice

Steven Harris explained that pay-as-you-go coverage or usage-based insurance could be worth exploring if drivers are spending less time on the road or using their vehicles differently.

“Drivers are already thinking about how to spend less at the pump, so it makes sense to look at whether their insurance reflects how they actually use their car,” Harris said.

But before switching, Harris recommends drivers understand the program rules, since lower mileage or safer driving habits are only one part of how premiums are calculated, along with whether their policy details are up to date, commuting distance, and how the vehicle is being used.

“Before switching products, start with the basics,” Harris said. “If higher gas prices have changed how often you drive, whether you commute or how you use your vehicle, make sure those details are accurate before deciding what option makes the most sense.”