How does an insurance company determine your premium? Surely this is a question you’ve asked yourself more than once over the course of your life as a driver. To put it simply, an insurance company will evaluate your “risk” as a driver: how much you drive, where you drive, the safety features of your vehicle, and so on.
If you’re a driver in Ontario, you know how steep auto insurance costs can be. This is because out of all 10 provinces, Ontario’s rates are the second highest in Canada1 (next to British Columbia, who ranks #1 for priciest auto insurance). Don’t let this keep you from thinking you can’t save a buck or two on your auto insurance. You may not be aware of these tips and tricks (that some seasoned drivers don’t even know about).
1 – Safe Driving pays off
Did you know that you can get a discount on your insurance rates for having winter tires on your vehicle? It’s a small discount (which varies from company to company), but if your annual premium is on the higher side, a 2%-5% discount can go a long way. Always keep your receipt for either the purchase or the installation of the tires so you can provide it to your agent or broker. Most companies won’t offer a discount for all-season tires, but that doesn’t mean that you can’t ask, just to make sure. Taking a defensive driving course or having an upgraded alarm system could also grant you some savings.
2 – don’t pay for coverage you don’t need
You’ve probably heard through the grapevine how important it is to have collision and comprehensive (physical damage) coverage on your vehicle in the event that you’re in an accident, or if your vehicle is damaged while parked. Though this is true, you should also consider the value of your vehicle before adding these coverages. Submitting a claim on a vehicle that is worth less than $2,000 could end up costing you far more than the value of the vehicle. You need to find the right balance between what you need and what you’re comfortable with. If having a certain coverage “just because” it gives you peace-of-mind, it might not be worth saving a few bucks a month.
3 – Look at increasing your deductibles
If you do have comprehensive and/or collision coverage on your auto insurance policy, then you’re aware that you have deductibles that accompany these coverages. If you are involved in a collision, or your vehicle suffers damage while it’s parked/not in motion, these deductibles are your out-of-pocket costs towards the repair of your vehicle. The two most common amounts are $500 and $1,000. The higher the deductible, the lower your premium for that coverage. Why? The insurance company will charge you less because you’re paying a larger sum up front. If you’re comfortable with a higher deductible, you can even ask your provider if they will go higher than $1,000 (some conditions apply).
4 – Consider how you’re using your vehicle
Do you commute to work, or maybe you work from home? Are you a student driving to school weekly? How often do you drive your vehicle in the evening and on weekends? How frequently are you on the road? These are all questions to ask yourself when determining the use of your vehicle. If you don’t have a daily commute to either work or school, make sure your policy reflects as ‘pleasure use only’, as having a commute comes with a premium. Along the same line, the insurance company takes into consideration the number of kilometers you drive annually: the higher the number, the higher the premium. It’s worth taking a closer look at these points to see if you’re overpaying based on your usage.
5 – Do your research before you buy
Did you know that you get charged more for insuring a vehicle that has a high theft rate? As per the Insurance Bureau of Canada in 2020, the 2017 Lexus RX350/RX450h was the vehicle stolen most frequently in Ontario. This make/model, along with the Honda CRV make up 70% of the top 10 list. The same goes for a vehicle that is more frequently involved in accidents. For example: the Honda Civic is one of the more popular vehicle choices for young drivers (who tend to get into more accidents), which in turn hikes up the insurance rates for all Honda Civics of the same year. Expensive parts and high tech gear (such as lane-changing sensors/cameras, auto-parking and auto-braking features, speedometers that are built into the windshield) are other components that can affect your insurance premium, as they cost more to replace in the event of a loss. Make sure to do your research before you buy!
6 – Bundle your products
Whether you own or rent your home, if you purchase a homeowners or tenant policy package, you are eligible to have it bundled with your auto insurance for a discount. This also goes for boats, RVs, motorcycles, etc.
There are a few other things you can consider to lower your insurance rates, such as paying your policy premium in full to avoid finance charges for monthly payments, having no gaps of insurance or previous policy cancellations, or subscribing to a UBI (usage-based insurance) program. If you’re interested in ways you can save on your auto insurance, please feel free to reach out to InsuranceHero.ca and we will be more than happy to provide additional details. You can also get a quote in less than 5 minutes. We’re always here to answer any questions that you may have.
1Ontario figure updated February 2020 by Canada Drives to reflect 1.56% average increase (Source: Insurance Bureau of Canada – GISA [General Insurance Statistical Agency] data for private insurers)