Insurance: Cut the Cost of Driving

The average auto premium in Ontario is now roughly $1,300, according to the latest industry-wide data. One thing is sure though, everyone thinks they're paying more than they were. If you feel the same way, here are a few tips to make some potential changes to your policy and lower your premiums.

Shop around

It does pay to compare prices, however switching back and forth probably doesn't. Every insurer has access to the same data base so it's not that difficult to weed out high-risk drivers. The large firms put a value on long-term customers and, if you're one of the good guys, they'll probably acknowledge it in some tangible way such as a discount on your premium.

Choose the vehicle that's cheaper to insure

The more expensive the automobile, the more costly the coverage. That's not the end of it. If you're in the market for a new vehicle, consider this: some models are considered easily damaged or expensive to repair. You'll pay more in insurance - as much as 15% - for them, regardless of the actual purchase price. Most companies can supply you with a list of cars by their risk category.

Drop collision coverage on older vehicles

If you only use your old wreck to return beer bottles on the weekends, forget collision coverage: It accounts for as much as 30% of your premium and only covers the car's replacement value. Check the coverage after four or five years or when the premium equals 10% of the vehicle's value.

Lose the performance car

Speed costs. That's why a two-door coupe will run you a bit more than a sedan. If you have a performance car under wraps somewhere, it's really going to cost you. But not as much if you drive it selectively. With two cars, your insurer may be willing to assume you'll be spending less time driving the hot item. Putting fewer kilometers on it - 12 to 15,000 a year is a typical cut off - can also help keep your rates within reason.

Even if one of your cars isn't a fire-breather, most insurers offer a discount to induce two-car families to insure both vehicles with them. You'll pay roughly 10-15% less to cover two cars than it costs to insure one. You can also expect a further discount from most firms if you combine your home and auto policies.

Raise your deductible

Everyone goes for the lowest number when setting the deductible - that's your up-front cost in case of an accident or theft. If the possibility of higher out-of-pocket expenses after the event doesn't worry you too much, consider raising your deductible. Setting the number at $1,000 as opposed to $500 can lop off a few more percentage points.

More savings are available by considering deleting glass coverage from the comprehensive section of the policy since replacement costs for a chipped or smashed windshield are often not that high. Check with your carrier to see if this might be worthwhile.

Take a defensive driving course

While you probably sent your kids to driver's education, you might be able to trim another 5% off your bill by going back to school yourself. An approved defensive driving course gives you leverage. Keep in mind though that some companies only offer this perk to the very young or the very old.

Put teen-age drivers on the family policy

Age, marital status and driving habits are the principal factors in determining what you'll pay. In general, the younger you are, the more you'll pay. And young male drivers face the biggest premiums.

If your children still live with you, it's probably worth your while to limit them to the older car and put them on your policy. Be cautious. If any driver on your policy has an accident or a history of traffic tickets, your carrier can issue a surcharge or even cancel your coverage. You have to balance the short-term gains for the long-term risk.

Move to the country

As a last resort, you can always move to a different community to reduce your insurance rate. Smaller cities have less traffic, which reduces the chance of being involved in an accident and generally results in lower premiums. Someone living in a major urban centre could expect to pay as much as 35-40% more than they'd pay to insure the same vehicle in a small town, for instance. It's all about frequency of car thefts, break-ins and the like.

Article submitted by Velma Carroll, Ten Star Financial Services.
905.634.8834

printer friendly

Email this article