Auto insurance is most often mandatory, and overall a necessary investment to protect your car. And you are living in Ontario; you might be wondering if there is any tax here on auto insurance.
At first, it is best to learn about how auto insurance works, and Surex is perfect to know more about how these policies work. If you want to learn about the taxation laws on Ontario auto insurance, it is appropriate to start with HST. HST, or Harmonized Sales Tax.
Today, we shall look through how HST works and its requirements in Ontario, Canada.
What is Harmonized Sales Tax?
Harmonized sales tax or HST is at 13%. Every Ontario resident receives 8% relief on the provincial portion of HST for specified items. Back in 2010, it had replaced the 8% retail sales tax (RST) and the 5% federal goods and services tax (GST.)
Before the introduction of HST, there was RST which applied 8% to most goods and services. These include automotive accessories but not auto insurance premiums. It also does not fall under the federal goods and services tax (GST.). Even in current times, the auto insurance premium is an untaxed item in Ontario.
How Does HST Work on Accident Claims?
While Ontario levies no tax on car insurance premiums, in recent times, some companies charged this tax amount on accident claims. Due to this, many accident claim recipients initiated a court case against companies charging HST, challenging the legality. According to the insured, the insurers were charging the HST on the accident benefit claims.
However, the court threw out the filing due to a technicality. The courts were apparently not liable to prioritize this case as it fell under the LAT jurisdiction umbrella. All in all, reputable insurance companies who know the State’s law do not charge HST on an auto insurance premium.
Ontario Tax Breaks and its Benefits
While Ontario insurers do not charge any HST on the auto policy premium, some people might think otherwise. HST not being applicable for the policy creates various benefits for the insured. As a customer, you can use this situation to your advantage.
Many insurance clients believe that insurance quote price holds a standard 15% premium. However, there is no HST levied on insurance quotes. Taking this situation’s advantage, you can:
- Understand that the quote is not the final price of your chosen auto insurance. The amount is a mere estimate.
- Apply for quoted prices from several companies, compare them and opt for the most affordable and useful policy.
- Have zero worries about HST charges while shopping around for your car’s protective insurance.
Auto Insurance Tips If You Are a First Time Buyer
If it is your first time buying an auto insurance policy, the best suggestion is to stay prepared. Now that you know how the policy is HST-free, use these tips to make your purchase stress-free:
Read Policy Documents Carefully
One side effect of not reading your policy documents is expecting specific coverage, but it is not under your insurance. These are easy-to-read documents that take just a few minutes.
Reading your auto insurance document can clear up any doubts. Moreover, doing so can prepare you to place your further queries to your insurance agent. So before you make your final signature, read through every portion of your legal document.
Never be afraid to ask questions, especially when buying auto insurance. Your insurer might make an error on the document that can raise renewal or premium prices. Keep in mind that a busy insurance company can make such mistakes due to hurried schedules.
So if you feel that something in the document is not sitting right with you, inquire about it right away. By doing so, you can help fix an error and possibly save yourself from faulty expenses.
Do Your Research
There is nothing more effective than researching insurance. If you know how to lower premiums, you can utilize your insurance in the future without spending too much. For example, expensive cars can raise your premiums. So going for an affordable model can save you money on the car’s price and premium rate.
Many insurers lower premiums if you are a responsible car owner. For example, if you drive with snow tires and have a real-time GPS tracker, it can help you avail yourself of discounted rates.
Honesty is Key
When preparing your documents, an insurance company shall need you to be honest with your details. Often, some people choose to provide incorrect addresses or incomplete ones to cheapen their deals. Adding road names of less risky areas can lower premium rates.
However, if the insurer finds out about this mess during tough times, they can void your claim and deny your coverage. Therefore, one of the worst mistakes is to be dishonest with an affordable insurance company. If you want to cheapen your premium rate, but live in a high-risk area, take some proactive steps to protect your car. As mentioned in the previous point, being responsible can discount your auto policy’s premium payments.
If you find an affordable insurance quote from one company, it does not mean that other insurers will offer the same. Every insurance company is unique and different.
Every insurance company follows the same metrics to evaluate your premium rate. However, each prioritizes different aspects of the metrics. For example, if company A finalizes the policy rate based on your driving record, policy B determines the same using your car’s brand.
By comparing policies from different insurers, you can buy the one that covers your car’s most vulnerable needs.
Since there are no taxes levied on auto insurance policies in Ontario, you can opt for affordable coverage with no hassles. There is no need to worry about taxable premium payments if you own a car in Ontario. So if you are ready to buy your car, talk to an expert who can guide you about the appropriate amount of insurance you would need.