Car insurance is one of those things that nobody enjoys paying for, but is a legal requirement in order to own and operate a vehicle in Canada. For a full explanation of how car insurance works view my earlier post.
Even though auto insurance is a necessary evil there are several ways you can go about optimizing your auto insurance policy so that you maintain adequate coverage in case of an unforeseen event and pay the lowest premium possible.
10 Tips for Saving on Car Insurance
1: Drop collision coverage
If you drive an older vehicle chances are it isn’t worth much and costs a lot more in maintenance to maintain relative to a newer car. If you are in a collision with an older car chances are it isn’t going to be worth repairing and the insurance company will in the majority of cases just write you a cheque for what they deem to be the “fair value” of the vehicle as compensation.
Given that it often doesn’t make sense to pay additional premium for collision insurance on an older vehicle. If you are in an accident your liability coverage will cover the expense of repairing the other persons ca
r. By dropping collision coverage on your own car you stand to save quite a bit of your premium which you can then put towards the purchase of a new car should you get into a collision.
2: Drop comprehensive coverage
Comprehensive coverage helps pay for damage to your car resulting from incidents other than collision. This can include damages from falling objects, vandalism, theft, fire and certain natural disasters. Again if you own an older car it may not make sense to pay additional premium to carry comprehensive coverage.
3: Increase your deductible
The deductible is the amount that you are willing to pay to share the cost of a claim with your insurance company. For example if you are in an accident and it is going to cost $2,500 to repair your car and your car insurance policy is set up with a $500 deductible on collision coverage. In this case you would pay the initial $500 and the insurance company would pay the balance of $2,000.
Most insurance companies will offer a range of deductible options offering you choice on how much you are willing to pay of each claim. Obviously the higher the deductible or the more you are willing to share the cost of each claim then there is less risk for the insurance company and in turn they are able to offer you a lower premium.
4: Use anti-theft devices
Use a steering wheel bar, alarm system or have a GPS tracking system installed as an additional layer of protection against theft. Most car insurance companies will reward you with a lower premium for use of these anti-theft measures.
5: Buy a car with a low cost insurance rating
Some cars cost more to insure than others. This is due to different frequencies of theft and the cost to replace/repair the vehicle after a collision.
Before you buy or lease a car make sure to check the Insurance Bureau of Canada Car Insurance Ratings Guide to find out how vehicle stacks up.
6: Maintain a clean driving record
Nothing will increase the cost of your car insurance premium faster than a bad driving record. Several at- fault accidents or ticketed traffic violations will substantially hurt your driving record and the insurance companies require compensation for the risk they are taking to insure you. Most dings on your driving record can also take years before they are removed from your premium calculation.
That said, it is important to always drive defensively and within the law at all times to prevent an unwanted accident or traffic violation.
7: Adjust how your car is used
Your insurance company calculates a portion of your premium based upon how you use your car. Do you drive 10,000 KM a year back and forth to work or 50,000 KM a year across the country for business? By reducing the number of KMs that you drive a year can impact your premium. Perhaps taking public transit, biking or walking to work a few days a week is an option to reduce your annual KMs.
8: Take advantage of multi-insurance product discounts
Most insurance companies will offer substantial discounts if you own more than one insurance product with them. The most common insurance product to bundle with your auto insurance is home insurance.
When setting up an auto insurance policy ask the customer service rep what the discount are if you hold multiple insurance products. I have seen discounts in the range of 5-15%.
9: Take advantage of multi-vehicle discounts
Most insurance companies will also offer discounts for having multiple vehicles listed on a policy. This opportunity to save usually exist when you have a family with multiple vehicles or when two people move in together with separate insurance policies.
10: Get multiple quotes
There are numerous insurance companies out there who have different criteria for calculating premiums. So the most important thing you can do to get the lowest auto insurance premiums is to SHOP AROUND.
There are a lot of great services online that allow you to directly compare auto insurance quotes from leading insurance companies in your area by entering your vehicle and driving history once. The best tool that I have found for Canadian auto insurance quotes is Kanetix.ca
Ever wondered how your vehicle stacks up in terms of how much it costs to insure relative to other cars? The Insurance Bureau of Canada provides a very handy Excel spreadsheet with all of this data summarized for vehicle model years from 1995-2007.
