Cheap(er) Car Insurance: Strategies to Save Money

This article has been updated from a previous version.

If you live in a city like Toronto or Vancouver, insurance is likely the second-biggest monthly car expense you pay, after gas. Unlike gas, though, you can’t save money on car insurance by merely rationing your driving.

Or can you?

Here are some simple strategies that can help cut your premium:

Take a driver’s education course

If you take and pass a recognized driver education course, you should be eligible for a discount on your rate from your insurance provider. Is it too late to take a course now that you have your licence? According to our research, no. Driver education courses teach driving strategies for many situations that you’ll encounter — poor weather, heavy traffic, night driving — and make you a safer driver. Check with your insurance company. If you’ve had your licence for many years, you may already be getting the experience discount.

Drive defensively

Your driving record is one of the metrics insurance providers consider when calculating your premium, and it’s the one part of that calculus you can control. That means driving cautiously and avoiding getting traffic tickets or into a collision.

Tickets and at-fault accidents will result in a higher premium. Should you end up with a ticket or are involved in a collision, make sure you compare car insurance rates on renewal because the increase you may see with your current provider may mean they’re no longer the provider who gives you the best car insurance rate.

Bundle your home and auto policies

Many insurance providers, particularly those linked to banks and financial institutions, will offer a discount if you bundle your car insurance with your other insurance, like home insurance. It’s important to make sure your discounted rate is better than a rate from a standalone insurance provider.

Pay your premium upfront

Many insurance companies charge a fee to cover the cost of administering monthly payments. If you can afford to pay the cost of your annual premium in one lump sum, you’ll pay less for your policy than paying it in monthly instalments.

Get snow tires

Snow tires give you better control over your vehicle in winter conditions. You should have them on your car before the temperature goes down to 7C, where all-weather radials start to freeze and lose grip. If you have them on your car from a specific date — Nov. 1 or 15, or Dec. 1 for some policies — your insurance provider is required by law in Ontario to offer a discount of 2% to 5%.

Sign up for a safe driving program

Many insurance providers will offer a discount if they can attach a telematics device to your vehicle or if you download an app on your phone. These devices monitor your mileage and driving behaviour. Some people are squeamish about such intrusion, but millennials and post-millennials are used to the quid pro quo of privacy for value.

The end game that some insurance providers are looking at is using telemetry for real-time insurance. For example, if you are driving on an urban route with significant traffic, the meter would go up compared to driving on a country lane. Obeying the speed limit and avoiding erratic braking behaviour can help reduce your premium.

Increase your deductibles

If you have collision and comprehensive coverage on your policy, you’ll want to take a look at what your deductibles are. If you switch your deductibles from $500 to $1,000, you'll save somewhere in the region of 5% to 10%. Of course, increasing your deductibles means you’re increasing the amount you’ll have to pay in the event you need to make a claim, so increase your deductibles with care.

Choose the vehicle you drive wisely

Before buying a new vehicle, make sure the car insurance for it doesn’t stretch your budget.

Car insurance rates are calculated, in part, by the car you drive. Insurance providers consider the chances it'll be stolen, its repair costs, and how well it protects passengers from injury if involved in a collision. Cars, like the drivers behind the wheel, are all rated differently. If you pick a vehicle with a high theft rate, for example, you could be paying hundreds of dollars more for car insurance each year.

Switch to pay-as-you-go insurance

Motorists who don’t drive daily shouldn’t have to pay the same rates as road warriors who put on 40,000 kilometres in a year. Fortunately, since 2018, CAA has offered what’s known as pay-as-you-go insurance. (Unfortunately, it’s currently only available in Ontario and Atlantic Canada). It’s not a true pay-by-mile arrangement like those available in the U.K. and some American states, where you pay a base rate and are charged for every mile or kilometre you travel. CAA passed on that model because some Americans were experiencing sticker shock when they got their monthly bills.

Ask about discounts

Talk to your broker or provider about the discounts they offer. For example, many universities and colleges have partnerships with insurance companies to offer discounts to alumni. In the same vein, many non-profit organizations offer similar discounts for members. These arrangements may be bound to a single insurance provider, so make sure your discounted rate is better than those offered by other insurance providers.

Don’t wait until renewal time to shop around

There are lots of insurance providers out there, and they’re willing to make a deal for your business. Whether you purchased a new vehicle, moved to a new neighbourhood, or are looking for a more affordable option to get the coverage you need, don’t wait until your policy is up for renewal to explore your options. Take a few minutes to compare policies and premiums in real-time to help make sure you get the best rate.