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Updated: Apr 13, 2023, 1:46pm
Fact Checked
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Nobody wants to overpay for the necessities of life like gas, rent and cellphone service. The same holds true for car insurance. And just as you can search for deals on other purchases, you can hunt for ways to lower your car insurance costs.
Given that the average good driver in Canada pays anywhere from $950 to over $1,800 per year for car insurance, reducing your premiums by just 10% can put more money in your pocket. Here are 10 tips to help you drive down your car insurance premium.
Many of us shop around for bargains on electronics, clothes and other everyday purchases. You can apply the same strategy to car insurance.
Whether you are getting insurance for the first time, renewing coverage or switching to a different insurer, don’t overlook the savings you can score by comparing rates from several auto insurance companies.
Car insurance rates for the same coverage can vary significantly among insurance companies, so if you don’t shop around, you won’t know how much you can potentially save. A good rule of thumb is to get quotes from at least three insurers in order to compare car insurance costs and coverage.
Be sure to compare identical policy coverage and limits, so it’s an apples-to-apples price comparison.
Also, it’s important to keep in mind that you may have fewer options depending on what province you live in. That’s because Canada has two different insurance programs: Private and public. Car insurance in Ontario, Alberta, New Brunswick, Newfoundland, Nova Scotia and PEI is provided by privately-owned insurance companies, giving drivers more options to choose from. Drivers in British Columbia, Manitoba and Saskatchewan buy their insurance from government-backed plans, giving less of an ability to save. (Though private insurers in those provinces offer additional coverage options.) Quebec uses a hybrid system of both government and private insurance.
By reviewing the deductibles attached to your current coverage, you may be able raise them and, in turn, save money on your monthly premium. Deductibles are typically attached to loss or damage coverage, including comprehensive, collision or upset, specified perils and all perils.
A car insurance deductible is the amount you’re responsible for paying when you make an insurance claim. It’s either taken out of your insurance cheque or it’s the dollar amount you need to pay the mechanic after the repairs are done. You choose your deductible amount when you purchase a policy, and you can adjust your deductible later if you change your mind. A higher deductible means you pay a lower premium. That’s because you’re taking on more of the costs if you file a claim, and you’re less likely to make claims for minor damage because the repair costs won’t exceed your deductible amount by much.
However, if you bump up your deductible, it’s a good idea to set aside enough money in case you wind up filing a car insurance claim. For example, let’s say your claim payout for a crash is $5,000 and your deductible is $1,000. Your insurance company will pay $4,000, so you’re responsible for $1,000 in out-of-pocket expenses to repair your vehicle damage.
You’ll often see commercials promoting the ability to bundle auto and home insurance. Most insurance companies offer discounts to policyholders who carry both auto and home policies, and bundling can apply to other coverage such as motorcycle and boat insurance.
Generally, a bundling discount (also known as a multi-policy discount) can reap savings of 5% to 25% or more.
Not only can you earn a discount from bundling, but also purchasing more than two policies from a single company simplifies your insurance as you’re with one carrier.
Auto insurance companies offer a trunkful of discounts aside from bundling discounts. Some of the most common discounts include:
A number of car insurers enable you to potentially trim your bill by signing up for usage-based insurance (UBI) also known as telematics. These programs use an app to track your driving behaviours. Factors tracked include how many kilometres you drive and at what time of day, speeding and how often you slam on the brakes.
If the data shows you’re a good driver, you can qualify for a discount. For example, with the CAA Connect UBI, drivers will receive a 5% enrolment discount and can save up to 15% on their premium after one year. Other examples of usage-based car insurance include Ajusto from Desjardins, Aviva’s Journey and Traveler’s IntelliDrive.
Be aware that in some cases usage-based insurance could cost you more in the long run. Drivers who use a UBI system get a score out of 100 based on driving behaviours and habits, and if you score poorly, your rates could increase.
Successfully completing a defensive driving course that’s approved by your insurer can result in savings on your car insurance. According to Young Drivers of Canada, a driver training course could save you 10% to 20% off your car insurance. However, the discount only lasts for a certain term; for example, insurance companies in Ontario provide a discount for the first three years after obtaining your certificate.
Some insurers will lower your car insurance if you park your car in your home garage rather than in your driveway or on a street. Data shows that cars parked in garages are less prone to being stolen or having crash damage.
When you’re visiting car dealerships in person or online, take into account the type of car you’ll be buying. Some cars are cheaper to insure than others and new cars are pricier than used cars.
In addition to your age, driving record and other variables, car insurance companies consider the type of vehicle you drive when pricing your coverage. They look at how likely it is that a certain car will be stolen, how much it typically costs to repair that kind of car, how safe it is and the amount of claims made for similar models.
The Canadian Loss Experience Automobile Rating (CLEAR) assesses how likely it is that a specific vehicle will be involved in a claim and for how much. Using that data, the Insurance Bureau of Canada publishes an annual edition of “How Cars Measure Up” that analyzes statistics on the number and cost of collision, comprehensive, Direct Compensation Property Damage (DCPD) and accidents benefits claims for the most popular vehicle models in Canada. You can check out the list yourself to see how your car measures up.
When choosing your insurance coverage, you can save money by evaluating your driving habits, as well as your tolerance for risk. While there is mandatory insurance that all drivers need, including third-party liability and accident benefits, you can also choose optional loss and damage coverage, including specific perils, comprehensive, collision or upset, and all perils coverage. The most comprehensive (and expensive) coverage is all perils coverage that combines collision and comprehensive coverage.
However, if you don’t commute to work, live in a small town or drive an older car, you might not need insurance that covers so many possible accident scenarios or losses.
Instead of spreading out premium payments by paying monthly, consider paying your premium in one annual lump sum. Many car insurers will give you a small discount for doing so. Even if it’s not advertised, it can make good money sense to ask.
It can. If your province uses a graduated licensing system, newer drivers will pay more for insurance. For example, since 1994 Ontario has used a graduated licensing system where drivers must pass three levels of training: G1, G2 and a full G. Drivers have five years to get their full G licence (thought it can take as little as two years) and once fully licensed, in most cases, drivers will receive a discount to their car insurance. That’s because insurance companies consider fully licensed drivers more experienced and less of a risk.
If your car has safety equipment like anti-lock brakes, air bags and daytime running lights, you may get a discount. For example, PC Insurance offers an autonomous emergency braking system discount for cars fitted with this safety feature.
Insurance providers in Ontario offer a provincially-mandated winter tire discount of between 2% and 5% for drivers who keep four winter tires on their cars for a specified period of time.
Not all car accidents make your rates increase. For example, if the other driver was at fault, you shouldn’t see a rate increase at renewal time. And if you have Accident Forgiveness coverage on your policy, your rates may not go up when your policy renews
But if you caused the accident or the police gave you a traffic citation, it’s likely your insurance rates will go up.
John Egan is a freelance writer, editor and content marketing strategist in Austin, Texas. His work has been published by Experian, CreditCards.com, Bankrate, SHRM.org, National Real Estate Investor, U.S. News & World Report, Urban Land magazine and other outlets. John earned a bachelor's degree in journalism from the University of Kansas and a master's degree in communication from Southern New Hampshire University.
Michelle is an insurance analyst at Forbes Advisor. She has been a journalist for over 30 years, writing about insurance for consumers for the last decade. Prior to covering insurance, Michelle was a lifestyle reporter at the New York Daily News, a magazine editor covering consumer technology, a foreign correspondent for Time and various newswires and local newspaper reporter.