New drivers
If you have teenagers in your household, don't forget to tell your insurance company if they will be driving your car occasionally. "They should be added to your policy as soon as they get a G1 licence," says Dave Stauffer, a partner with DeHart and Stauffer Insurance Brokers in Oshawa. (Ontario has a graduated licencing system, where beginners start by driving under supervision at all times.) "There's no extra charge when they have a G1 and it gives them some insurance history."
Encourage your kids to take a driver's training course, one with at least 25 hours in the classroom and 10 hours behind the wheel. This will give them a lower rate later on. And if they live in Ontario, taking a driver's training course will let them proceed to the next licensing level (G2) in eight months, instead of one year, after passing a road test.
After shopping around, we found the driver's training credit would reduce the car insurance premium from $2,444 to $2,311 (a saving of $133 a year) for a 19-year-old Toronto male with a G2 licence and no accidents. It would mean a $26 annual saving (from $1,390 to $1,364) for a 19-year-old female driver in Toronto.
Some insurance companies even give a price break to young people who have good marks in school. The idea is they'll be better drivers if they apply themselves to their high school or university studies. So, if your child has a good report card, ask the insurance company whether you can submit a copy and get a lower rate.
Changing companies
Suppose you decide to change insurance providers after shopping around and finding a lower rate. Don't cancel your old policy until your new insurance company confirms your coverage in writing. Otherwise, you could be left stranded - for example, if information turns up later that causes the new insurer to increase your quoted rate.
Also, try to make the switch right before your renewal date. If you wait too long and notify your insurer after the renewal date, you will be charged a penalty. One Toronto Star reader was told he had to pay $245 - about 10 per cent of the cost of his premium - because he was one day late in getting his paperwork done. The ombudsman at his former insurance company agreed the penalty was excessive for a one-day delay and waived it after we appealed his case.
You must notify your current insurance provider in writing if you decide to move. Don't think you can simply refuse to pay the renewal bill. If you don't provide written notification, you are still committed to that insurance and on the hook for the payment, Praskey says.
Save without switching
You don't have to switch to save money on car insurance. Try raising the deductibles, the portion you pay out of your own pocket before the insurance company covers the claim. I went through the exercise and got a $640 reduction in premiums for our two cars, amounting to a 25 per cent discount.
When I checked the policy (which I confess I hadn't done regularly), I found we had $300 deductibles on our collision and comprehensive coverage. I raised them to $1,000; that was where the big savings came in. Collision and comprehensive pay for repair or replacement of your car if it's stolen or damaged in an accident, or hit by a storm or natural disaster. The standard advice is to keep the deductible as high as you can afford. For me, $1,000 was an amount I felt comfortable paying out of pocket - not out of line with what I would pay for major mechanical repairs not covered by insurance.
More than our collision and comprehensive deductibles were woefully out of date. The third-party liability coverage, for example, was only $500,000. Every province requires a minimum of $200,000 (except Quebec, where the minimum limit is $50,000). Liability pays for property damage and bodily injuries caused by you or your vehicle to others. If there's a claim against you for more than your level of coverage, you can be held personally responsible for the balance.
I doubled the liability coverage on both cars to $1 million, figuring that was the key part of the policy. And it's not all that expensive to do. It costs an average $45 a year to raise your liability coverage from $500,000 to $1 million, says Lee Romanov, who runs a company that helps people shop for insurance (www.insurancehotline.com). To go from $1 million to $2 million costs an additional $45 a year.
Some people drop their collision coverage altogether for older cars. (This coverage is optional in all provinces except Manitoba and Saskatchewan.) That's because relatively minor damage could cost more to repair than what the vehicle is worth. But if you do so, be prepared to pay out of pocket to repair or replace your vehicle if you're hit by an unidentified driver - whether it's your fault or not.
Consider, too, that if your car is damaged in a hit-and-run accident, the only way for insurance to pay for that damage is through your collision coverage. "If you don't carry collision insurance, you will be stuck with the entire bill for an accident that wasn't even your fault," says Sally Praskey in The Insurance Book: What Canadians Really Need to Know Before Buying Insurance (sold through the Insurance Canada Web site). "Your only other recourse would be to track down and recover the money yourself from the driver who hit you - a challenge for even the most intrepid P.I. And don't look to your insurance company to help you. You're on your own."
