Shop Insurance Canada: Ontario High Insurance Rates Offset Recent Student Reforms

September 10, 2015 (PRLEAP.COM) Business News
Shop Insurance Canada is highlighting the problem with Ontario's failure to lower car insurance premiums, saying it will impact students despite recent student finance reforms in the province. Originally announced during the 2015 budget, Ontario through its Student Financial Assistance Program (OSAP) has revamped its system, which is now more open, flexible, and easier to use. The changes to be implemented will come into effect for the 2015-16 school year and will usher in myriad options to the way students calculate and manage money.

OSAP's changes include:
  • Giving students flexibility over how much financial aid they withdraw, allowing them smaller amounts if they want.
  • Students do not have to declare ownership of a vehicle when describing assets in a student loan application.
  • Simplifying student contributions where students now have a fixed $3000 amount.
  • Student aid is now indexed against inflation.
  • Exempting the first $3,000 in a student's assets from their financial aid assessment.

  • These new reforms have improved the system, streamlined it, and made it easier to understand for students, but has it made things better? OSAP's changes have divided the student community, with some seeing benefits in the streamlined service and other believing little has really been changed.

    Some students are set to save money long-term according to the Student Financial Assistance Program, but actually student drivers could still be paying as much as they always have, if not more. Premier Kathleen Wynne and the Liberal government had pledged in 2013 to decrease premium rates by 15 per cent before the end of August 2015, a target that was not met. The province only reduced rates by 6.46 per cent, which is good on paper but is actually problematic because a recent study revealed that drivers in Ontario pay more for their auto insurance than they should.

    The Ontario Trial Lawyers Association said that between 2001 and 2013 drivers in the province have paid between $3 billion and $4 billion more than they should for car insurance. While the study took into account a 12 year period, it also showed that the trend is rising year-on-year, with drivers overpaying by $840 million in 2013.

    With drivers paying more for insurance and Ontario failing to lower average premium rates, students are likely to be effected, despite recent reforms by OSAP. 84% of all students in Ontario are of the driving age demographic that is most afflicted by high premium auto insurance, the age group 16-24. In 2004 Transport Canada found that just 13 per cent of Canadian drivers were in the 16-24 age group, but this 13 per cent accounted for a sizeable 25 per cent of all accidents that ended in injury or fatality. Since 2004 that disparity had grown and it is the reason why insurance companies make 16 to 24 year old drivers pay up to 47 per cent more for their car insurance.

    So, the student may have been helped by OSAP's reforms, but thousands of student drivers around Ontario are still being hit hard by high insurance rates in the province. Whether the new student finance regulations and changes are enough to offset that remains to be seen.

    Luke Jones is a journalist professional at Shop Insurance Canada, Canada's authoritative expert in car insurance news, information, and rates. Compare quotes from up to 15 different car insurance providers in minutes.

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