Not all car insurance is created equal. There are so many factors that can affect your rate – from your driving record to the city you drive in, to your credit score – so it’s a good idea to do your homework before going all in. Here are some things to keep in mind as well as some useful tips to help you find the best car insurance at the best possible price. Let’s roll!
Types of coverage in auto insurance
Insurance policy coverage falls under two general types: mandatory and optional. What’s considered mandatory and optional features, however, can differ quite a bit from province to province, so be sure to check with yours so you know what to expect. Learn more about mandatory and optional coverage.
What raises and lowers car insurance?
Curious how insurance companies come up with their rates and why premiums are different from one company to the next or one person to the next? In a nutshell, insurance companies gather all kinds of data to evaluate the risk you pose and how likely you are to file a claim. There are several factors that have an impact and several others that surprisingly make no impact at all. Let’s take a look at them.
Things that increase car insurance
- Your driving record – Tickets, accidents, demerit points. They all play a massive role in determining your insurance premiums – the more driving infractions you have, the riskier you are to cover, so up goes your rate.
- How often you drive – The more you drive, the higher your rates. Why? Because you’re spending more time on the road, there’s a higher potential for accidents or infractions to occur.
- Change of address – Premiums vary from postal code to postal code and where you’re moving to may bring along higher rates. For example, if you live in a small town where there are lower crime rates and then you move to a big city, you could see an increase. A bigger, busier city also has more traffic, bringing along a greater chance of getting into a fender bender.
Things that decrease car insurance
Wondering how to get lower car insurance rates? Aren’t we all. Here are a few things that can tip the scales in your favour.
- Training – Does drivers ed. lower your insurance? You bet it does. Your insurance company sees you as someone who actively wants to become a better driver, so that can help lower your premiums. It also arms you with defensive techniques that can save lives on the road. Win-Win.
- Safety features – No matter the insurance, they’re all based on the same principle: the higher the risk and cost to settle, the higher the insurance. It’s a good thing to take into consideration when purchasing a vehicle. Choosing one with a lower theft rate, good security and solid safety features may help lower your premium.
- Credit history – Unbeknownst to most Canadians, insurance companies may use credit scores as a means to determine an individual’s rate, though it depends on where you live. Most provinces, with the exception of Ontario, Newfoundland and Labrador, are permitted to tap into your score when making risk calculations. The better your credit score, the lower your risk and (potentially) your premium.
- Demographics – It is generally understood that men pay more than women in car insurance. However, all drivers under the age of 25, regardless of gender, tend to pay more for car insurance overall. Assuming a mostly clean driving record, rates typically start to drop after 25 years of age and continue to drop as the driver gets older.
Things that do not impact your car insurance
Contrary to popular belief, here are a few things that have no impact on your car insurance, whatsoever.
- Employment history – Credit history, yes. Employment history? Not so much. The only reason an insurance company may ask about employment status is to verify your identity, but it has no influence on your rate at all, unless you’re actually using your vehicle for your job (like a courier).
- Car colour – Do white cars have lower insurance? It’s about time this long-held myth got busted. Colour has absolutely nothing to do with determining your insurance rate. So no need to get beige or grey, you want red? Go for it.
How to save on car insurance
Without further ado, here are our top tips to save money on car insurance.
- Maintain a good driving record – Fewer claims means fewer payouts and there’s a good chance your insurance company will reward you with extra savings.
- Ask for a discount – It couldn’t hurt, right? Just be wary. Insurance companies may offer a little bit of wiggle room but at the cost of increasing your deductible or adjusting your coverage.
- Shop around – To make sure you’re getting the best possible rate around, check out a comparison site like rates.ca or ratehub.ca. There you can compare rates for all kinds of trustworthy car insurance companies so you can choose the right one for you.
- Bundle – Another way to get the best bang for your buck is to bundle your home and auto insurance with companies like Sonnet. Companies usually give a multi-policy discount as they’re getting more of your business.
- Pay annually – If you go for an annual plan, not only will you be able to pay upfront and forget about it, you’ll typically score some sweet savings to boot.
- Increase deductible – Your premium rate goes down if you choose a higher deductible, just know that it means you’ll be paying more in the event of an accident.
- Explore one of the many driving apps offered by insurers - In return for sharing your driving habits you may see a premium reduction. At this point insurers are not allowed to raise your rates based on your driving habits as captured by the app.
The cost to insure a car in Canada
So, how much does it cost to get car insurance? Well, that depends on where you live. But to give you a ballpark, you can find out the average cost of car insurance in Canada here. This will help you answer the question: how much should car insurance cost per month?
There you have it! Our tips to help you find the best car insurance possible. Whichever route you decide to go, just be sure to review your policy annually to guarantee you’re still getting the best rate for you (especially if your needs change throughout the year). Good luck!
This article is for informational purposes only and isn’t to be relied upon as a professional advice.