Is there HST on Car Insurance in Ontario?

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Is there HST on Car Insurance in Ontario?

Auto insurance is a necessary evil, and as Canadians, we’re used to paying some of the highest rates in the world! But don’t worry, if you live in Ontario there’s no HST tax on your car insurance.

Does that mean I’ll save money?

The answer is yes – but it depends on how much coverage you need. If an individual has enough liability coverage for damage or injury to others (or their property) then they will have reduced costs over time because this type of policy usually covers what other people might call “the bare minimum.” However, those who want comprehensive protection from expensive accidents may be better off investing more upfront by purchasing additional types of auto policies like collision or uninsured motorist coverages.

Prior to the implementation of Harmonized Sales Tax (HST) on July 1st, 2010, Ontario had a Retail Sales Tax (RST) tax that applied 8% towards most types of goods & services sold at point-of-sale locations including automotive accessories. However, because car insurance premiums were never included in this list they continue to remain untaxed.

Effect of Harmonized Sales Tax (HST Ontario)

Ontario’s new HST system, which took effect in 2010, includes the elimination of its PST on goods and services. However, it retained an 8% PST for other types of insurance premiums. This means that car insurance is exempt from this tax while other types of insurance are taxable at 8%.

HST on Accident Claims

Recently, there have been some cases brought before the courts in Ontario about HST and accident claims. A few insurance companies were charging HST on the claim they paid out to people who had an accident, instead of paying it themselves. Some recipients of this charge went ahead with a court case challenging whether or not that was allowed by law – but their filing recently got thrown out because of a technicality that the courts were not bound to hear due to it being under the umbrella of the LAT jurisdiction.

Tax Breaks

Individuals looking to insure their vehicles should take advantage of this tax break. While many people are aware that HST is applied on most purchases in Canada with few exceptions, they may be under the impression that there will also be a standard 15% HST automatically added to the quoted price. You might be wondering if you’re paying for just the insurance premiums or if there other things in that price.

When looking at your quote, it’s important to remember a couple of key points:

Car Insurance Tips

Car insurance in Ontario can be a confusing topic for many people. It’s not uncommon to hear about common mistakes that are made. Here are some tips to make sure you are prepared before you purchase a car insurance policy:


What tax is charged on insurance in Ontario?

One type of taxation that has been added as more Canadians try to take care of their own health costs is Premium Tax-or “premiums” which are paid by all Ontarians who have an active business license located inside the province borders. The Ministry of Finance administers the premium tax to insurance companies and:

  • administrators of funded and unfunded benefit plans, also referred to as Ontario uninsured benefit arrangements
  • anyone buying insurance placed with an insurer not licensed in Ontario
  • reciprocal or inter-insurance exchanges.

Here are the insurance premium tax rates:

Type of InsuranceRate

Is there GST on vehicle insurance?

No, there is no GST on car insurance. Both GST and QST do not apply to insurance premiums.

Is a car insurance claim taxable?

Most auto insurance claims for medical bills are tax-exempt. This is because when it comes to health care and car accidents, the company will usually pay a hospital directly or simply reimburse you for medical expenses that would not be considered income by most employers.

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