If you are operating a motor vehicle in Canada, having car insurance is legally mandatory. But it is a good idea in any case. Auto insurance takes care of you and your passengers, pedestrians, and property in the event of an accident. You should be insured not only to obey the law but also to protect your interests by preparing for the worst-case scenario.
In most of Canada, the minimum amount of coverage you must have is $200,000. Certain provinces require less coverage. In Quebec, drivers must purchase at least $50,000 of minimum liability insurance. Getting the coverage isn’t cheap; nationally, the average monthly car insurance premium is just over $100. But that’s an average. Individual premiums vary dramatically. In this post, we’ll look at how auto insurance is priced and what you can do to obtain the best possible rates.
What Affects Auto Insurance Rates?
Many factors affect the price of car insurance. Some are easier to change than others.
- Your driving record. Auto insurance covers you and your passengers in the event of an accident. If you have several accidents on your driving record, you become much more expensive to insure than you would be if your record were spotless.
- The make and model of your car. Auto insurance covers your vehicle if it is damaged or even totaled. More expensive car models are more expensive to insure simply because they are more expensive to repair.
- The deductible that you choose. A deductible is the amount of money you must pay if you need to make a claim; it is “deducted” from the total amount that the insurance company would have paid if there were no deductible. The higher the deductible, the lower your insurance premiums.
- The type and amount of coverage. In most provinces, the minimum amount of coverage you must have is $200,000. If you choose more coverage, your insurance premiums increase as well. There are also different types of coverage, such as collision and comprehensive insurance, that will increase your monthly premium if you add them to your basic coverage.
- Your postal code. Some areas of the country have more crime and accidents than others. Vehicles in high-crime or high-accident areas are more expensive to insure because a driver in those areas is statistically more likely to make a claim.
- Your marital status. Married drivers are less likely than single drivers to be in auto collisions. Auto insurers take this into account and offer married drivers a better rate.
- Your age. Age has a major impact on insurance rates because it is very closely tied to driving experience. The older you are, the more driving experience you probably have, and the lower your insurance premium will be. After you reach 25, insurance rates decrease significantly. They begin to increase again after you reach 65.
- Your sex and your marital status. Insurance companies do not always consider these two variables when pricing insurance premiums. But when they do, they tend to give married drivers better rates than single drivers. They also tend to charge teenage and young-adult women less for insurance than they charge men of similar age. In the case of older drivers, the insurance companies charge men less for insurance than they charge women of similar age.
How to Get the Best Insurance Rates
Just as you shouldn’t go with the first price on the first car you look at, never go with the first quote you receive for car insurance. Companies don’t necessarily weigh these factors similarly, and some insurers may offer cheaper insurance than others for someone with your group characteristics. Shop around to make sure you’re getting the best possible premiums. Cheaper doesn’t always mean better. Do some research on the insurance firm you choose, especially if you are unfamiliar with their brand.
Pay attention while driving
The world of the driver is full of distractions: cell phones, GPS, infotainment systems. It is harder than ever to stay focused on the road. But making a conscious effort to keep yourself and your passengers safe can help you save a lot of money on your insurance.
Try local and regional insurers
Desjardins, TD Insurance, and Intact Insurance are three of the most popular car insurance companies Canada, highly praised for their customer service, coverage options, and financial strength. You’ve probably seen one of their ads. Because the brands of these three insurance companies are so recognizable, many new drivers simply choose one of them. But you can often save money by trying lesser known local and regional insurers. For example, firms like Kanetix, SquareOne, and Johnson are often rated as highly as the big brands and may be able to offer you lower rates.
Ask about discounts
Ask and you will receive. You can often get a discount simply by asking your car insurance agent for one. Some companies bundles auto insurance with other policies, such as homeowners insurance, in order to offer better rates on both. You can also reduce your rate by insuring more than one car with a single policy. A number of discounts may be available to you for the asking. But you must ask.
Use public transit once in a while
When you apply for insurance, insurance companies usually give you a questionnaire to fill out; your answers help determine your rate. One of the questions pertains to how many kilometres, approximately, you drive in a year. The average Canadian drives about 15,000 kilometres a year; if you drive less than that, you may get a better rate. So consider using public transit when you can in order to reduce the mileage you put on your car. This tip is even more useful with respect to pay-as-you-go and per-mile insurance, since in these cases what you pay is directly related to how much you use your vehicle each month.
Skip comprehensive and collision coverage
You usually must obtain comprehensive and collision coverage when you are leasing a car or are financing the purchase of a car. But if you are driving an older car that is completely paid off, you can do without this insurance, and skipping it will substantially reduce the rates that insurance companies offer you. But there’s a downside. Without comprehensive and collision coverage, you may be on the hook for the damages caused by theft, vandalism, or acts of nature like floods, hail, and fire. So take that risk into account.
Increase your deductible
Auto insurance deductibles range from $100 to $2,000. The higher your deductible, the less you must pay in insurance premiums every month. But if you ever have to make a claim, the higher deductible means that you must pay more out of pocket for the damage.
Car insurance rates are highly variable. The price you must pay depends on several factors. When shopping for car insurance, follow the tips we have outlined here to get the best possible rates.