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6 Tips for Cheap Car Insurance

If there’s one thing that everyone can agree on, it’s that Canadians pay too much for car insurance. Ontarians overpay for car insurance the most, with British Columbians not far behind.

There are 24.2 million vehicles registered in Canada – of that number, one third are registered in Ontario. With so many drivers packed into one area, accidents are bound to happen. That’s probably why cities in the GTA consistently rank as the most expensive cities for auto insurance in Canada. In fact, only one of the top ten most expensive cities for auto insurance in Canada is not in the GTA – Hamilton. And it’s not like Hamilton is too far from Toronto, either.

The Ontario provincial average for auto insurance is $1,316 per year, or $110 per month. Citizens of Brampton, the most expensive city for car insurance, pay an average of $2,268 per year, or $189 per month – 72% more than the average! And if that isn’t bad enough, the average annual cost in Quebec is $628; Brampton rates are 261% more.

Unfortunately, there’s nothing a single driver can do about the millions of other drivers on Ontario roads. Your only option is to follow these guidelines to make sure your premiums are as low as possible.

 

1.     Shop Around for the Best Deals

It’s very unlikely that you’ll happen to be with the company that offers the cheapest car insurance in Canada. With dozens of companies all offering car insurance, you’ll have to shop around to find the best rates.

It can be easy to stick with your current insurance provider, especially because many insurers offer loyalty discounts. You may even think you’re already getting an amazing deal.

But in Ontario, rates actually went up across the board during the last quarter of 2018. According to FSCO, the average rate increase was 3.35% - but that doesn’t tell the whole story. In fact, that figure represents the “market impact” that the rate increases had. They do not mean that the average car insurance rate went up 3.35%.

Here’s the table they published:

Insurer

Market Share

Increase

Allstate Insurance Company of Canada

1.29%

4.50%

Aviva General Insurance Company

2.97%

16.80%

Aviva Insurance Company of Canada

0.38%

8.63%

Belair Insurance Company Inc.

5.57%

0.00%

CAA Insurance Company

2.80%

1.65%

Certas Direct Insurance Company

0.51%

14.57%

Coachman Insurance Company

1.63%

16.02%

COSECO Insurance Company

6.29%

5.03%

Economical Mutual Insurance Company

5.34%

0.00%

Farm Mutual Reinsurance Plan Inc. (on behalf of Ontario Mutuals)

6.60%

0.00%

Guarantee Company of North America, The

0%

6.66%

Hartford Fire Insurance Company

0.44%

34.87%

Heartland Farm Mutual Inc.

0.33%

6.98%

Northbridge General Insurance Company

5.19%

0.00%

Pafco Insurance Company

0.60%

6.00%

Pembridge Insurance Company

0.65%

7.95%

Personal Insurance Company, The

0.06%

10.05%

S & Y Insurance Company

4.08%

9.48%

Scottish & York Insurance Co. Limited

1.75%

5.84%

Sonnet Insurance Company

0.51%

14.55%

Sonnet Insurance Company

1.38%

0.00%

Traders General Insurance Company

1.48%

8.64%

Unifund Assurance Company

0.46%

4.04%

Zenith Insurance Company

1.15%

10.12%

 

As you can see, the average rate increase was actually 8.02%, with 10 companies coming in above average. The largest rate increase was from the Hartford Fire Insurance Company, who increased rates by a whopping 34.87%! If you suddenly had your rates jump by over a third, you wouldn’t be happy knowing that the “market impact” was just 3.35%, would you? The only saving grace is that very few Ontarians are insured through Hartford.

Most of the top insurers that applied for a rate increase were denied. The top 22% of companies by market share were denied a rate increase for Q4 2018. This came as a surprise to me, because usually the best financial products come from smaller providers (that’s the case for savings accounts and TFSAs) but for insurance, most of the top insurers didn’t increase their rates.

FSCO didn’t give an average cost, however, so it’s possible that smaller insurers still cost less per year after the increases. That’s why you need to get car insurance quotes and compare companies so you know who is offering the best deal.

 

2.     Check (and Ask) for Discounts

Many insurance companies give discounts to customers if they’re a member of a certain group. One of the most common groups that get a car insurance discount are university alumni. TD Meloche Monnex gives discounts to many different university alumni, for example.

It never hurts to ask your insurance broker if there are any discounts available. If you don’t ask, you’ll never know – and the worst that they’ll say is “No, sorry.’

Another easy way to get a discount on your car insurance is to bundle it with your home or renter’s insurance. Nearly every company that offers one type of insurance offers many types, and they’d love to get more of your business. Bundling your insurance policies can save 15% or more!

Finally, remember that insurers are required to give you a winter tire discount.

 

3.     Install Telematics

 

Something new that many insurers are offering is a discount for enrolling in a program that monitors and scores your driving habits. Called telematics, these programs claim to let you get up to a 25% discount on your next year’s insurance policy.

There are two types of telematics. The first is with a device that plugs into your vehicle’s OBD port. The OBD port is usually just below and to the left of your steering wheel. The device then reads the information from your vehicle’s on-board computer about how fast you accelerate, hard you brake, and how many kilometres you drive, among other things.

The other option is to install an app on your phone that uses your device’s gyroscope and GPS functions to track your driving instead. It requires you to have an Android or iPhone that’s recent enough to run it, however.

Insurers will give you a discount just for signing up for the program, even if you end up driving like a maniac. Some other good news – your premiums won’t increase even if you are a terrible driver.

 

4.     Keep a Safe Driving Record

If you don’t make claims, your car insurance should go down every year. The people with the cheapest car insurance are those with several years (and even decades) of clean driving.

While your insurance company can’t see how hard you accelerate or brake unless you install telematics, they will see how often you make a damage claim, or get tickets and demerits. Speeding, running red lights, and damaging other cars or property will cause your insurance to skyrocket. Getting a DUI might make it impossible to get affordable insurance, as the companies that insure people with DUIs charge exorbitant amounts.

 

5.     Consider Insurance Before You Buy a Car

It’s no secret that certain types of cars are more expensive to insure than others. This has multiple reasons, including:

-        The likelihood of being stolen

-        How expensive it is to repair

-        How likely it is to be involved in an accident

Expensive foreign cars are much more expensive to insure because they’re at a greater risk of being stolen, and newer cars are more expensive to insure than older ones because they cost more to repair. German cars also have a tendency to have more costly repairs than Japanese cars, which can affect the insurance as well.

Before committing to a specific car, do some online car insurance quotes to see how different makes, models, or years affect your monthly premiums.

 

6.     Lower Your Coverage

As a last resort, you can always reduce your insurance coverage.

Sometimes insurance is just too expensive. If your rates went up more than 10% this year without any increase to your coverage, you’d be right to think about reducing your policy.

Cars depreciate over time, which means you’ll get less money if your car is totaled in a collision. But if your rates are increasing, you’re paying more for less coverage!

Just be sure when you’re deciding to lower your coverage that you still have enough insurance for your needs.

 

Driving is already expensive enough with gas, licensing and car payments. Don’t let insurance squeeze your budget even tighter. Click here to do a 5 minute car insurance quote and get quotes from 5 different insurance companies so you can see which company has the best car insurance rates.


Chris Chris 02/12/2019
Canadian personal finance buff and all-around writing enthusiast, Chris loves breaking down complicated money ideas to show that they're really not so complex. 
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