Shop 'til you drop: Get the facts before buying car insurance
Purchasing automobile insurance is a fact of life for a car owner, but do you have the information you need to get the coverage you require and the premiums you want to pay?
Auto insurance is a competitive business, and it pays to get the facts before buying so you can make an informed decision and get the best deal and coverage you need.
Fact 1: Several factors will affect what you pay
Money matters, so it's important to know how your premiums are calculated. Essentially the cost of your car insurance premiums is based on risk. Risk is assessed by the probability of an insurance claim by an individual and group of individuals in the same circumstances, as well as how much the claim could possibly cost. Your insurance professional will consider several risk factors when calculating your premium. These risk factors include the following:
- Your driving record. Driving infractions such as speeding and at-fault collisions will likely increase the cost of your policy, while a clean driving history might keep your costs down.
- The vehicle you're insuring. Insurance rates will generally increase if you're driving a newer or expensive vehicle, as its replacement or repair costs might be at the higher end. Additionally, some vehicles are more at risk for theft or damage in collision, so your insurer will review the make and model of the automobile you're driving to determine what you'll pay for coverage.
- Your location. Driving primarily in a busy urban area might increase your likelihood of a collision or theft, which could increase your premiums.
- Your driving habits. How many kilometres do you drive each year? Do you drive to work or school? Driving a lot increases the chance of having an accident, which could result in a higher policy cost.
- The claims history of your statistical group. Your premiums might be higher if you are part of a group of the same age of drivers in the same location who are more likely to make a claim.
- The coverage you need. Adding additional drivers and optional or increased coverage to your policy will affect your insurance premiums.
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Fact 2: Insurance suppliers and coverage vary across Canada
All provincial and territory governments require vehicle owners to carry mandatory car insurance. However, the minimum amount and possible supplier vary by location. In B.C., Saskatchewan and Manitoba, government-run insurance agencies supply basic insurance but have private companies that sell additional coverage. In Quebec, certain claims are handled by the government-run insurer, while others are processed through private companies. In the rest of Canada, private companies sell all levels of auto insurance. For more information on mandatory coverage and other related information by province, visit the Insurance Bureau of Canada (IBC) website, or consult with your insurance provider.
Fact 3: There is more than one way to purchase auto insurance
In fact, there are three:
- Through a broker — will try to get the best deal from all the companies he or she deals with.
- From an agent — sells insurance from one company only.
- From a direct writer — a company that sells insurance online or through a call centre.
Fact 4: You can customize your auto insurance policy
Yes, once the mandatory minimum coverage has been met, you can work with your insurance representative to create the automobile policy that's right for you. Be aware that you will be covered only for losses that are outlined in your insurance contract. The following are a few options to consider:
- Increasing liability coverage
- Adding collision or comprehensive coverage
- Increasing your deductible (out-of-pocket cost when making a claim) to reduce your premium