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Why auto-renewing your car insurance can cost you

Feb. 3, 2023
3 mins
A young man with glasses drives down the street

This article has been updated from a previous version.

In the world of car insurance, the best time of year for drivers can be renewal time.

It's the time of year when your current policy is approaching expiry and you can easily switch auto insurance providers, for any reason. Yet many drivers allow their policy to auto-renew, which may seem convenient but can end up being a costly mistake.

Don't auto-renew out of habit

While it may seem minor, automatically renewing your policy without ensuring you're getting the best deal possible can have a major impact on your annual finances.

You could end up spending hundreds of extra dollars for your coverage each year. A lot can happen in the span of a year that can affect your rate, including the following lifestyle changes: .

  • Your provider’s rates have changed. Every insurance company regularly reviews the premiums they charge and adjusts their rates based on their claims experience with the drivers they cover. As a result, premiums often change and the only way to know if your provider's rates are still the most competitive is to compare its rates with those of other companies.
  • You got married or moved in with someone. Until now, your own driving and insurance history dictated your auto insurance rate. Depending on which province you live in, your insurance company may be allowed to use marital status as a factor in determining your rate. In Ontario, for instance, marital status is used to determine and set auto insurance rates. If that’s the case, with another driver in the house, you may find the company that provided you with the best rate as a single person may not offer you the best rate as a couple.
  • You moved to a new neighbourhood or city. Your address influences your insurance rate, and if you moved over the past year, you'll want to update your policy and make sure you're still getting the best deal. Each company uses its own algorithm to assess the likelihood of collisions, theft, or vandalism in a given postal code. And each company has a different claims payout history in a given neighbourhood. This means there's a chance you could be overpaying for your coverage if you don't compare your rate at renewal.
  • You bought a new car. The vehicle you drive is also a major factor in determining your car insurance rate, in part due to theft rates as well as repair costs. If you switched to a new vehicle that boasts a lot of advanced technology and safety features, you may find your rate has gone up because those parts are costly to fix in the event you make a claim. This could signal it’s time to compare car insurance rates if you find that your premium has jumped.
  • Your teen is licensed now. Some companies are more teen-friendly than others. If you have a new driver in your household, it's worth checking to see if another provider will give you a better car insurance rate for secondary drivers when your policy is up for renewal.
  • You got a ticket or were involved in an at-fault collision. Collisions and tickets happen to even the best drivers, but some insurance companies are more forgiving than others. A ticket stays on your insurance record for three years, and after this period is up, an insurance company may surcharge the ticket differently, giving you a lower rate.
  • You changed jobs or retired. If the amount of time you spend commuting changes, your insurance premium could change as well. By spending less time behind the wheel, you may find you could spend less on your coverage with a different provider.

A year is a long time to overpay for your car insurance coverage

Your auto insurance renewal is the ideal time to see if another company is a better match for you and your changing lifestyle.

This year, use RATESDOTCA to compare your renewal rate with the best auto insurance rates in your province. With a simple search, you can compare rates and find a new insurance provider for the year ahead.

Interested in creating content with RATESDOTCA? Reach us at email@rates.ca.

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Lesley Green

Lesley Green is a seasoned writer and editor. She previously worked at RATESDOTCA, sharing her expertise with the marketing team for nearly two decades. Lesley enjoys live theatre, travelling, curling and, depending on how well she's hitting the ball, golfing.

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