Canada is on a COVID-19 lockdown until further notice, and for a good reason. Government and medical officials have made it clear that one of the most effective ways to prevent the deadly coronavirus infection from spreading is to stay home and practise social distancing.
Non-essential businesses across the country are following this sage advice by allowing their employees to work from home, or temporarily laying off their workers until the threat passes. Either way that means people are driving less often than they usually do. With that in mind, here are eight ways you may be able to reduce your car insurance premium during the COVID-19 pandemic:
1. Take One of Your Two Cars Off the Road
If you have two vehicles, and you think your family can manage by driving only one car, look into temporarily suspending your car insurance coverage on the vehicle not needed. Know that if you choose to park one of your two cars and suspend the insurance on it, you must not drive it for any reason at any time. It is illegal to drive a vehicle without insurance in Canada. If a police officer catches you driving without insurance, the penalty can be severe, and it will detrimentally impact your auto insurance premium.
Call your insurance agent or broker and find out what your options are. Taking one of your vehicles off the road and suspending its insurance coverage can save you money in the short term, but there may be consequences for doing so, including:
- The insurance company may consider you to be a higher risk for suspending your policy, even temporarily
- If you remove the comprehensive or all-perils coverage on your parked car, your vehicle will not be covered for damages resulting from things like theft, vandalism, or fire
- If you rent a vehicle, you will need to purchase the rental car company’s expensive coverage since your policy has been cancelled (assuming you have rental car coverage on your policy)
2. Reduce Your Auto Insurance Coverage
Another option may be to reduce your coverage to the minimum for a vehicle you are not driving. If you do, the good news is you will still have the mandatory coverages required by law. In Ontario, accident benefits, third-party liability, uninsured auto and direct compensation-property damage are mandatory; in Alberta, accident benefits and third-party liability are required.
3. Lower Your Annual Kilometre Count
Another way to save funds may involve reducing the amount of annual kilometres you drive as listed on your policy. If you use your vehicle to commute to work or occasionally for business, let your broker or insurer know you’re driving less, since there could be savings you can tap by changing your vehicle classification from “commuting/pleasure” to “pleasure”. However, once the lockdown ends, don’t forget to contact your insurer and inform them you are returning to driving the same distances you once did.
4. Enrol in a Usage-Based Insurance Program
Enrol in your insurer’s usage-based insurance (UBI) program. You may earn a monthly discount based on how you drive, how often, and how far you drive.
5. Up Your Auto Coverage Deductibles
Think of it this way: the higher your deductible, the lower your monthly premium. A deductible is the portion of your insurance you must pay if you file a claim to get your vehicle repaired before your insurance policy is activated. Raising your deductibles can make a small difference. But it can be a double-edged sword. Your financial situation should dictate the deductible you choose. In other words, make sure you can afford to pay the higher deductible.
6. Drop Comprehensive Coverage on Older Vehicles
If your car is 10 years old or older, you may want to consider removing the comprehensive coverage on it, if you have it. Comprehensive coverage is optional. It pays for losses other than those covered by collision coverage such as theft, fire, or hail.
7. Ask about Discounts
All insurance companies offer their customers discounts. For example, there may be discounts available for the types of driver-assist technologies your vehicle has, such as lane mitigation or a rearview camera. You can also get a discount for bundling your home insurance, condominium insurance, or tenant insurance with your auto policy. Find out what other discounts your insurer may provide.
8. Shop Around before Renewing Your Policy
Are you nearing renewal time for your car insurance policy? Give yourself an edge and explore your options by comparing auto policies and premiums. Like in any industry, auto insurers compete for your business by offering different coverages at various rates. You never know how much you might be able to save until you shop around.