When it comes to paying for the household car, many drivers simply write the cheque and try to forget about it, but financial advisers say Canadians can tweak their auto insurance plans and save big money.
"It amazes me that people just take the renewal and pay it," said Anne Marie Thomas of Insurance Hotline, an online insurance rate comparison service. "I think maybe we're a bit defeatist. A lot of people just buy the package that the insurance professional suggests and they don't think to question it."
But an easy Internet search can help cut your insurance fees by a significant amount, Ms. Thomas said. All it takes is a small amount of time and a few good questions to ask your insurance representative.
It's always a good idea to get the insurance company into the conversation early and often, whether you're squeezing a few years of life out of an older vehicle, or buying the latest model. If you're in the market for a new car, now is the perfect time to determine extra ways to save money before you even walk onto the lot.
"Insurance on the vehicle model can vary significantly, even [whether it's]a two-door or a four-door," said TD Insurance vice-president Henry Blumenthal. For example, hybrid vehicles receive an extra discount on insurance, he said. This stage is the perfect time to start talking with your insurer about ways to save.
"Sometimes the price will also vary because of the frequency of accidents connected to a vehicle type," Blumenthal said.
Owners who have had the same car in their garage for years can consider other ways to trim the bill, like checking the book value of their vehicle model. Ms. Thomas suggests picking up a used car publication like AutoTrader magazine for a gauge of how much a vehicle with a similar year, make, model and mileage is worth. Drivers sometimes overpay for collision coverage on older models because their deductible is outdated.
Also, consider the benefits versus the losses if your car is involved in a collision and becomes a junker.
Let's say your car is valued at $1,500 before the accident, and once you file a claim you pay your $500 deductible. The maximum payout from the insurance company would total $1,000 – an amount that might not justify the annual fee you're paying. If you were shelling out $300 each year, your insurance company would only give you a payback of $700, at most. The payout would be even less if you add up the $300 annual fee that would accumulate over several years, as well as the potential impact on your rates over the next six years.
Other ways to save:
Increase your deductible
If you want to pay a smaller premium then a significant boost in your deductible can save you big money, but it can also cost you more if there's a claim.
Combine your insurance
By choosing the same insurer for both your house and your car you can get a discount.
Use public transit or carpool
Insurance companies will charge you less if you don't use your vehicle for the daily commute, or if you only use it a couple times a week.
Conviction-free drivers
Insurers will provide a discount if you have a clean driving record.
Shop around for group discounts
Most alumni associations offer discounts for members, while other organizations like the Canadian Association of Retired Persons and the Canadian Association of Social Workers provide special packages.
Driver's training
Insurance companies will favour new drivers who take a driver's training course.
Park in the garage
Antique car owners can save a bundle if they park inside, though most insurers won't take that into account for newer cars.