Think twice before cancelling auto insurance

Q: I’m considering getting rid of one of our personal cars—we have two. It is beyond its years and at the moment we don’t need it and have no real parking space for it.  My concern is insurance premiums when I finally do require a car and commit to buying another. We intend on adding me as a driver on my wife’s vehicle and it could be some time before we purchase another. Will my premiums go up if I’m not a principal driver for a long period of time?

– Frank in Oshawa, Ont.

A: This is a great question and one that I wish more people asked before getting rid of their vehicle or cancelling their insurance.

Your insurance history does have an impact on how much you pay for auto insurance. If you have a lapse/gap in your insurance history, it can affect your overall rating and increase premiums. If you didn’t add yourself to another policy as a driver you would have a gap in your insurance history. Adding yourself as a driver to your wife’s policy is a great way to keep your insurance history unbroken for when you buy another vehicle again. You don’t need to be listed as a principal driver, just as long as you are listed as a driver.

By removing a vehicle from your policy, you will likely lose a multi-vehicle discount of 5% to 15%. Here are some tips that can help you save money. Shop the market—insurance pricing and coverage offerings are changing all the time, and your profile just changed from a two-car, two-driver family to a one-car, two-driver family. The company that was most competitive for you when you had two vehicles might not be the best for you now. There may be another insurance company whose target customer is now your new situation and they could provide better rates.

One last tip I would recommend is to make sure your name is on the ownership of your wife’s car, even though that might cost you a few dollars (if anything). This will allow you to become named insured on the policy (the policy always matches the names on the ownership). It’s a small detail but having your name on the top of the policy as an owner will then give you the ability to make changes, discuss or negotiate claims, and order pink slips. The added convenience is worth it.

Adam Mitchell is president of Mitchell & Whale Insurance Brokers in Whitby, Ont.

Read more:

• 10 auto insurance myths you should stop believing now
• Auto insurance coverage in Ontario just changed
• How to cut your auto insurance costs