In Ontario, a driver’s licence suspension can significantly affect your automobile insurance premiums.

When a license is suspended, insurance providers often view this as an indication of increased risk. This perception can lead to higher insurance rates, particularly if the suspension is associated with unsafe driving behaviours.

However, not all suspensions are for traffic violations; some are for administrative or medical reasons, which can be treated differently by insurers.

High-risk drivers are those considered more likely to file an insurance claim based on their driving history.

This group includes individuals with multiple traffic violations, serious infractions like DUIs, a history of accidents and driver licence suspensions. Other factors affecting insurance rates can be a lack of driving experience or owning a high-performance vehicle can also contribute to this label.

High-risk insurance, which comes with higher premiums, is typically necessary for drivers who fall into this category.

Being classified as a high-risk driver can have a substantial impact on your wallet due to increased insurance fees. If you find yourself in this category, understanding the financial implications and what contributes to your designation as high-risk can help you manage the situation more effectively.

What Makes a Driver High-Risk?

High-risk drivers include those with a history of traffic violations, at-fault accidents, or serious offences such as driving under the influence (DUI). Drivers who have had their licences suspended for reasons that indicate risky behaviours also fall into this category. Even drivers who have not maintained continuous insurance coverage can be seen as high-risk due to the perceived probability of irresponsible driving behaviours.

The Financial Impact on High-Risk Drivers in Ontario

1. Higher Premiums: The most direct financial consequence for high-risk drivers is significantly higher insurance premiums. Insurance companies adjust rates based on the perceived level of risk associated with insuring a driver. High-risk drivers can expect their premiums to be much higher than those of average drivers, sometimes by as much as two to three times the standard rate.
2. Policy Fees: High-risk drivers may need to obtain insurance through non-standard insurers specializing in high-risk profiles, which often charge higher policy fees. These fees compensate for the increased likelihood of claims being filed.
3. Coverage Terms: In some cases, high-risk drivers might face stricter terms on their policies, such as limited coverage options or higher deductibles, which require paying more out-of-pocket in the event of an accident.

Being categorized as a high-risk driver in Ontario certainly means facing higher insurance fees, but it’s not a permanent status. By understanding the factors that contribute to this designation and actively working to improve your driving habits, you can eventually reduce your insurance costs.

An administrative lapse or suspension of a driver’s license occurs for reasons unrelated to driving offences.

These can include the non-renewal or expiry of a license due to oversight, temporary medical conditions, or unpaid fines.

Such suspensions, known as Administrative Driver’s License Suspensions (ADLS), do not reflect on the driver’s capability or behaviour on the road. A new policy from the Financial Services Commission of Ontario mandates that any increase in insurance premiums due to short-term administrative lapses or suspensions must be backed by actuarial evidence, ensuring that drivers are not unfairly penalized.

Visit the Financial Services Commission of Ontario at https://www.fsrao.ca/media/7351/download.

An administrative lapse or a suspension of a driver’s licence is a documented driver’s licence lapse for administrative or medical reasons that are not connected to driving convictions.

Reasons can include non-renewal or expiry of a driver’s licence due to an oversight, temporary medical conditions, unpaid parking tickets, outstanding support payments to the Family Responsibility Office or outstanding payment to the Motor Vehicle Accident Claims Fund.

An Administrative Driver’s Licence Suspension (ADLS) is also considered an administrative lapse because there is no driving offence conviction connected with the suspension. The new policy is to ensure that future rating of short term administrative lapse or the suspension of a driver’s licence is supported by actuarial evidence.

Risk Classification Systems: If the length of an administrative lapse or suspension of a driver’s licence is under one year, an insurer is not permitted to use the lapse or suspension in its risk classification system. For example, an administrative lapse or suspension of a driver’s licence for less than one year must not affect an individual’s driving record or the number of years licensed for the purposes of rating.

When the length of an administrative lapse or suspension of a driver’s licence is between 12 and 36 months, an insurer is permitted to use the lapse or suspension as part of its risk classification system. However, the insurer must submit a rate filing with actuarial evidence to FSCO justifying the proposed rating rules.

The rate filing will be subject to the normal review and approval process. Otherwise, use of an administrative lapse or suspension of a driver’s licence between 12 and 36 months will not be permitted for the purposes of rating. If the length of an administrative lapse or a suspension of a driver’s licence is more than 36 months, an insurer is permitted to file rules to use the lapse or suspension of a driver’s licence as part of its risk classification system without additional actuarial evidence although the rules must meet the statutory criteria for approval.

For example, an insurer may consider the period of time during which the licence has lapsed or been suspended for the purposes of rating.