Cheap(er) car insurance: Strategies to save money

Car insurance is one of the biggest ongoing costs of owning a vehicle, especially if you live in high-rate cities like Toronto or Vancouver. 

However, there are practical ways that can help you lower your premium without sacrificing coverage. From bundling policies and raising deductibles to installing winter tires and shopping around, here are some of the ways that can help you keep more money in your pocket:

1. Get winter tires 

In Canada, winter tires aren't just about safety; they are a financial strategy. Winter tires give you significantly better control over your vehicle when temperatures drop below 7°C. 

In Quebec and British Columbia, winter tires are required by law during the coldest months. In other provinces, they’re strongly recommended. Using winter tires also helps protect your vehicle investment by reducing wear on all-season or summer tires, which can extend their lifespan. 

Not only that, drivers with a full set of winter tires may qualify for an auto insurance discount of up to 5%. 

Read more: How to afford and care for winter tires? 

2. Pay your premium upfront

How you pay can affect your costs. Monthly payments often come with extra fees, which add up like interest on your premium. 

If you can, pay your full annual premium in one lump sum. This removes those fees and can earn you a discount of usually 7% to 10%. If paying all at once isn’t possible, ask about semi-annual payments; they’re usually cheaper than monthly installments. 

Related: Should you pay your insurance premium annually or monthly? 

3. Increase your deductibles 

If you have collision and comprehensive coverage on your policy, take a look at your deductibles. This is the amount you agree to pay out-of-pocket before your insurance kicks in to cover a claim.

Auto deductibles typically range from $250 to $1,000, but if you have a clean driving record and some emergency savings, raising that amount can lower your monthly payments by 10 to 20%.

Of course, increasing your deductibles means assuming a bit more financial risk. Ensure you are comfortable paying that higher amount in the unlikely event you need to make a claim.

Read next: 5 bad driving habits that could cost you

4. Leverage your experience and loyalty

If you are aged 40 to 74 with a clean driving record, you are in a sweet spot for insurance rates. Insurers value experience and stability.

• Clean record: Your driving history is the biggest factor you control. Avoiding tickets and at-fault accidents keeps your risk profile low.
• Alumni and professional discounts: Many universities, colleges, and professional associations have partnerships with insurance companies. If you are an alumnus or a member of a specific union or organization, you might be eligible for exclusive group rates.
• Renewal reviews: Don't just auto-renew. Loyalty is great, but sometimes new customer offers from other insurers beat loyalty discounts.

Learn more: What a criminal conviction means for your auto insurance rate

5. Choose your vehicle wisely

Before buying a new vehicle, make sure the car insurance 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.

6. Sign up for usage-based insurance (UBI)

Many insurance providers will offer a discount of up to 15% if they can attach a telematics device to your vehicle or track your driving habits through 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 data. 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 also help reduce your premium. 

7. Bundle your home and auto policies

This is often the easiest win for homeowners. Many insurance providers offer discounts of 5% to 18% — sometimes even more, depending on the company — if you bundle your car insurance with your home insurance.

It simplifies your life by keeping all your policies in one place, and the savings can be considerable. That said, don’t assume a bundle is automatically the cheapest option. Do the math: compare the discounted bundle against the best standalone rates you can find. A quick online check can confirm whether bundling really pays off.

Which brings us to our next point…

8. Don’t wait until renewal time to shop around

There is a common misconception that you should only look at insurance rates when your renewal notice arrives in the mail. The truth is, you can shop around any time.

Insurance rates fluctuate based on market conditions, and providers are always competing for business. Whether you have moved to a new neighbourhood, bought a new car, or simply haven't checked rates in a few years, comparing your options is the single most effective way to make sure you aren't overpaying for insurance.

Take a few minutes to compare policies and premiums in real-time to help make sure you get the best rate.