Here's a crumb of good news about soaring gasoline prices - they can help you save money on car insurance.
With gas prices averaging close to $1.38 a litre across the country, a lot of us are slowing down and driving less. Under a pilot project in Ontario run by the car insurer Aviva Canada, this could lower the cost of insuring a vehicle.
Aviva's Autograph program customizes your premium based on your typical driving speed, distances travelled and the time of day most driving is done. "It's a response to the complaint consumers have that insurance doesn't reflect them as a driver," said Paul Fletcher, senior vice-president of brand marketing at Aviva. "This product makes the insurance premium that an individual pays far more unique to them as an individual driver."
Car insurance premiums are based on factors like age, driving record, years of driving experience, gender, the community where you live and the vehicle you drive. The amount of driving is a consideration, too, but only a nominal one these days because of the tendency for people to, um, prevaricate when disclosing their driving patterns to their car insurer.
Insurers are willing to provide lower premiums to people who drive less, but they need more than an individual's word that he or she drives only for pleasure and never to work. Autograph provides the proof through the use of a matchbook-sized device the size of a box of matches that can be plugged into the data port available on all cars built since 1996.
The Autograph device, which the Aviva people insist is easy to install, collects information on your driving habits on a daily basis. After six months, you take the device out of your car, hook it up to your computer and download the results to see whether you're in line to save on your premiums.
If the answer is yes, then you send the data on to Aviva and wait for an adjustment to be made to your policy, which is renewable after six months rather than the usual year. If you're not going to save anything, you do nothing.
There's an Orwellian Big Brother-like quality to Autograph, but Mr. Fletcher said the device does not transmit information on its own and thus isn't a high-tech snitch. "The consumer always has control of the data," he said. "It only ever gets to Aviva if the consumer chooses to send it to us."
Aviva hopes to roll out Autograph in other provinces next year. Mr. Fletcher said about 5,000 people have installed the Autograph device in their cars and the typical user has saved 19 per cent, on average.
At other insurers, it's doubtful whether you'll save much, if anything, on premiums by driving less.
"Our rating structure does not reflect the impact of mileage to any great extent," said François Boulanger, president of RBC General Insurance Co. The reason for this: "We found that that mileage reported by our clients was not reliable."
RBC still keeps track of client mileage, mind you. For example, it differentiates between people who drive fewer than eight kilometres to work and those who drive more. Also, if you said you're a pleasure driver only and you have an accident at 8 a.m., you can expect to be asked if you were really driving to work.
But this is all mainly for statistical purposes. The actuaries who set RBC's car insurance premiums are much more concerned with objective factors that people can't hide, like their age and driving record.
And yet, it's a fact that personal driving patterns have a big impact on the risk that people present to an insurer, especially if they use their car to commute. Mr. Boulanger said industry studies show that car accidents typically occur during rush hour, morning or afternoon, and Friday and Saturday nights as well.
Gasoline prices haven't been high enough for long enough to show a definitive change in driving habits. But if the rising gas price trend continues, premium relief in one form or another is likely.
"When there's big spikes in the price of gas, people in general drive less and have fewer accidents," Mr. Boulanger said. "So over time, premiums will decrease or not increase as much."
One factor working against lower premiums is a popular car insurance feature called accident forgiveness, where a first accident doesn't count against your record and affects your premiums by a small amount, or not at all. Mr. Boulanger said accident forgiveness is encouraging people to make claims on their insurance for accidents they would have paid for themselves in the past.
"There aren't more accidents, just more claims."
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DRIVING COSTS DOWN
Some websites you can use to compare car insurance premiums
Kanetix.ca
An online marketplace for all kinds of insurance
InsuranceHotline.com
Offering online insurance quotes since 1994
CarInsurance.ca
An online insurance brokerage
Insurance-Canada.ca
A source of insurance industry information as well as online quotes by province and for special needs like 50-plus drivers, and customized or antique cars.
