There may be many reasons why people in Quebec have to pay more for their auto insurance than people living in most other provinces. However, one of the biggest – for some people at least – is that insurers there use credit standing to determine the rates people pay, a practice that has been outlawed in the last several years in many parts of Canada. As such, those who have experienced financial difficulties that led to missed payments and other problems may need to do more to look into their options as a means of finding the most affordable coverage possible.
The practice of using credit scores to determine auto insurance rates has been banned in Ontario as well Newfoundland and Labrador over the past several years, and New Brunswick is moving in that direction as well, according to a report from the consumer credit site Creditcards.ca. However, anecdotal evidence suggests that while other people in other provinces have reported that negative credit information was used to deny them coverage altogether, that usually isn’t the case in Quebec, where such data is really only used to set prices on coverage.
A closer look at the issue
Due to concerns about this practice in general, the Canadian Council of Insurance Regulators has, in the past few years, convened a group to look into how these policies from insurers impact consumers, the report said. And while about two-thirds of Quebecers are said to benefit from lower rates on their home insurance because of their credit standing (based on data from 2011), and another 6 percent saw no change to their rates, that still left more than 1 in 4 residents there to suffer. But because the vast majority benefit, insurers say it’s good for the market as a whole that the policy remains in place.
“The removal of credit scoring as a rating tool would result in increased premiums for the majority of our clients,” George Hardy, an industry insider who submitted data for the report, wrote at the time.
The good news for consumers in Quebec is that they aren’t having their credit assessed by surprise, but rather they have to opt into the programs, the report said. As a consequence, those who have negative or limited credit histories can simply opt not to submit their scores in the first place. That, in turn, may help to shield them from the issue until they can build a better borrowing history.
What else is a problem?
On the other hand, it’s worth noting that other factors are at play for Quebec-based drivers, including the fact that La Belle Provence has extremely high auto theft rates in comparison with its neighbors, according to Statistics Canada. There, 36 vehicles are stolen every day, and 62 more are broken into. That’s about one incident of auto-related theft that results in a claim every 15 minutes or so.
So the fact is that auto insurance rates in Quebec are likely to be at least somewhat high anyway, but consumers should also do more to evaluate their options for keeping them as low as possible on an ongoing basis.