"Many people pay between $500 and $1,500 more than they have to for car insurance each year," says Lee Romanov, an auto insurance expert and consumer advocate in Toronto. "The industry is regulated and provincial governments have to approve rate increases, but insurers can attach whatever price they want to the policy depending on the profile of their target customers." This means your age and postal code determine your likelihood of filing a claim – at least in the eyes of the insurer.

Here, Romanov and Nancy Lee Martin, manager of consumer relations at the Insurance Bureau of Canada, show you how to keep costs down and ensure you get what you need.

1. Shop around
There are more than 100 insurance companies in Canada competing for your business. "Get as many quotes as you can," says Martin. Romanov created an online rating guide called Insurance Hotline, with a list of profiles and rates from more than 30 insurance companies.

2. One insurer is the way to go
If you aren't already using one insurer for your home and vehicles and putting all vehicles/drivers onto one policy, you're missing out on a multi-policy, multi-vehicle discount. This could save you anywhere from five to 15 per cent, says Martin.

3. Ask questions
If you do go with a broker, ask him if he is quoting you the insurer's lowest price, because he isn't obligated to, says Romanov. Also ask about the cancellation rules. Every policy has different rules and it's important to know what they are, otherwise an accident or a couple of tickets could lead to you being dropped.

4. Know your needs and wants
Ask yourself what you really need, then find out what companies are offering. One of the ways insurance companies differentiate themselves is through the "extras" they offer, such as 24-hour claim service, first accident forgiveness, disappearing deductibles, and claim service guarantees.


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5. Ask about tickets and accidents
Insurance companies rate tickets and accidents "horrifically differently," says Romanov. For example, some will raise your rate if you get a speeding ticket, while others won't. Be sure to ask up front before signing on.

6. Consider your vehicle and the deductible you are prepared to pay
If your car is sputtering out, you may want to skip collision and comprehensive coverage because repairing it may not be worth it. Liability coverage is enough. "If you are only going to save $20 on the premium you might as well opt for the lower deductible," Romanov says. "It will save you money in the long run."

7. Ask about an approved theft-deterrent device
"Many companies offer discounts if you have one," says Martin. "The device should immobilize the engine in your vehicle to prevent theft." 

8. Teens drive up insurance rates
Adding a teenage driver to your policy can quadruple your auto insurance costs, says Romanov, an auto insurance expert and consumer advocate in Toronto. Ouch!

"At a minimum, it will cost you a couple thousand dollars to insure your teen," she adds. Every situation is different, though. Insurers look at the driver's age, sex, the type of vehicle being driven, where he or she lives (some neighbourhoods have higher claim rates than others), whether the teen has had driver training, and whether he or she has had any tickets. "The best way to keep rates low is to have an accident- and conviction-free driving record," says Martin.


This story was originally titled "Car Insurance" in the May 2009 issue. Subscribe to Canadian Living today and never miss an issue!


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