How to cut your auto insurance costs

In 2013, the Liberal government of Ontario made a promise to bring down car insurance rates. The good news is that premiums in general have come down about 8.5% since then. Still, that doesn’t mean that average car insurance premiums are necessarily low. Earlier this month, Kanetix.ca released research showing that Brampton is the most expensive Ontario city in which to insure a car, with Vaughan coming in as a close second. In fact, 10 of the Top 11 areas where insurance premiums are highest were in the Greater Toronto Area. Brampton had an average insurance premium rate of $2,392 a year for a single, 35-year-old driver with a clean driving record while Vaughn came in at $2,018. (The average Ontario car insurance premium is $1,348). The lowest rates? Sudbury ($1,221), Barrie ($1,366) and Peterborough ($1,054).

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But MoneySense wanted to know why certain areas charged more for auto insurance. So we talked to Kanetix.ca vice-president Janine White. White says that there are a lot of things that go into determining an area’s car insurance premium but it all comes down to the average claims costs of the area. “As more claims are common to certain areas, then those area’s premiums will be higher as well,” says White. For instance, more accidents occur in high density areas such as the GTA and surrounding area. Theft and driving tickets are also more common in these areas. Other variables that affect your annual premium include the type of vehicle you own, the time of day and where you drive it, your insurance provider’s claims history and your own driving record.

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So what can the average driver do to keep their premiums low? There are two things you can do, whether you live in Ontario or any other province. First, White notes that 50% of Ontarians automatically renew their car insurance every year and assume they can’t get a better rate. That’s a mistake because drivers are looked at differently by every insurance company and some factors are weighted more heavily than others. “So take 10 minutes to call around and see if you can get a car insurance quote that will save you some money,” says White. Even if you don’t want to switch insurance companies, White says you’ll benefit from spending a few minutes reading over your policy and ensuring your home and car insurance are bundled, that you have winter tires on your vehicle (and noted on your policy) and that you’ve increased your deductible from $500 to $1,000 if you’re in the financial position to do so (meaning that if you’re involved in a car accident, you can easily pay that extra $500 out of pocket.)

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For older cars, it may make sense to remove collision and/or comprehensive coverage altogether which would further reduce the premium. “But that’s typically only recommended for a low value car. So if the car is worth $3,000, then could you remove the collision coverage all together, which means the customer would not get any coverage from the insurance company in the case of a collision for car repair/replacement. Removing the coverage lowers the premium as well.”Doing all these things can often cut your car insurance premium by 10%,” says White. And if you’ve already taken all of these steps? There’s good news for you too, because car insurance premiums in general are expected to come down a bit more in the coming years in Ontario. “Reforms have been put in place in Ontario to keep claims costs down,” says White. “And a continuing crackdown on fraud in the industry will bear fruit in the future with more premium reductions expected in general.”