Your car insurance policy comes up for renewal and you gasp at the higher premiums. After several years of stable rates, the average cost of car insurance went up 30 per cent across Canada in 2002. New Brunswick and Nova Scotia have seen huge hikes, up to 70 per cent. Those with lower increases include Manitoba and Saskatchewan, which have public auto insurance systems.

Premiums are going up because of an influx in non-serious injury claims, the private insurance companies say. They also blame the current investment climate of low interest rates and poor stock market returns, which hurt firms' ability to cover their underwriting losses.

Is it time to start shopping the market to see if you can find a better deal? Yes, if - and only if - you have a good driving record. However, if you and your family members have made several claims in recent years (even if the accidents were not your fault), you may find the rates quoted are much higher than what you currently pay. The effort is still worthwhile, even if you discover you're better off staying where you are.

Online shopping
The Internet is a real boon to comparison shoppers. Many Web sites will give you access to real-time quotes in minutes, even if you don't buy insurance online. It's much faster than spending hours on the phone trying to contact brokers and insurers directly. Online quotes usually come from two sources: Kanetix (www.kanetix.com), which quotes car insurance prices from about 10 large Canadian companies; and the Consumer's Guide to Insurance, which offers quotes from more than 30 companies online (www.insurancehotline.com).

Getting started
Before you get going, call your current insurer to get information about your driving history. How many claims have you and other drivers in the family made in the past six years? Ask for details of any accident or claim during that period (including claims under your comprehensive coverage, such as theft or windshield damage).

Tickets, accidents and previous claims
When you shop for new auto insurance coverage, you will also have to provide information about your conviction record in the past three years (offenses related to the operation of your car, such as speeding tickets and seat-belt infractions). You can obtain your motor vehicle record from the provincial transport ministry, but insurance companies require a three-year history. If you're not sure of dates, check with your current insurance provider.

It's a good idea to keep your own record of the dates of any tickets, accidents or claims. "If you're not sure of the date of your last ticket or accident, tell your prospective insurer you can't remember when it was," says insurance expert Sally Praskey, whose advice is posted at the Insurance Canada site (www.insurance-canada.ca). "If you say you haven't had any tickets in the last three years and the insurer discovers otherwise-and it will-it may refuse your application or charge you more for your coverage."

Some insurance companies will forgive one at-fault accident, especially if you're a long-term customer with an otherwise good record. Full accident forgiveness is an option that typically costs about $30 a year. It's worth the money. However, your chances of being forgiven are much less if you are a new client. Ask what the new company's forgiveness policy is for an at-fault accident before you make your decision.

Low prices can mean low settlements
The insurance company with the lowest price may not be the most generous in settling claims. "Likely one of the reasons it can afford to be priced so much lower than its competitors is that it takes a very tough stance at claims time," Praskey says. Ask your friends and colleagues who've had a recent claims experience how they were treated and whether their claim was settled promptly and without hassle.

A Star reader who's an insurance broker offers this advice to clients: By all means shop around, but make sure your prospective company won't cancel you or penalize you for an early accident. Get it in writing. If it won't do that, consider at length the accident forgiveness benefits you're giving up for the money saved.

You can also check the Financial Service Commission of Ontario's Web site, (www.fsco.gov.on.ca), a helpful resource even if you live in another province. There you will find an annual survey, which asks customers of 46 insurance companies and the Facility Association how happy they were with the claims settlement procedure. While the overall satisfaction rate is 86 per cent, the satisfaction rate for individual companies ranges from 61 per cent for Kingsway General (a company that insures high-risk drivers) to 95 per cent for State Farm Mutual.

Switching firms
Alas, my own record is a tad tarnished. I had a minor collision, a fender bender, in 1999. It was my fault, since I failed to notice a car coming through an intersection when I was at a stop sign. My insurance company paid $889 to fix my car's front bumper (over and above my deductible). As a result, I lost my preferred rating, given to drivers who have been licensed for 15 years or more with no claims or accidents. It cost me about $200 a year in higher premiums.

But when I started comparison shopping with the help of Lee Romanov, who runs the Consumer's Guide to Insurance, I found that 1999 claim would hurt me much more if I switched. She told me I already had a decent rate with Liberty Mutual Insurance Co., which charged $2,554 to insure our 1998 Toyota Sienna van and a 1997 Ford Escort. (We get discounts for having our two cars, plus home insurance, with the same company.) She promised to get me a slightly cheaper $2,300 annual rate from Lombard Insurance. But that soared to more than $4,000 when I mentioned the 1999 accident claim.

My next stop was Kanetix, whose Web site I found very easy to navigate. But I was disappointed to get only three quotes-ranging from $3,979 with Direct Protect to $6,625 with York Fire & Casualty-all much more than my current rate.

Later I did an experiment to see the dollar impact of my single accident claim. When I said I had a claims-free record, Kanetix gave me insurance quotes for the Toyota from 10 companies, ranging from $1,277 with Lombard to $2,272 with Direct Protect. But when I included my accident claim, just four companies wanted my business. And their quotes ranged from $2,702 with RBC Insurance to $4,517 with Allstate Insurance Co. of Canada.

Of course, I didn't go elsewhere after finding out how good a deal I had. This is a tough time to be switching companies. Insurers blame the terrorist attacks of Sept. 11, 2001, for making them skittish about accepting new customers with spotty records. But, in effect, they're penalizing frequent users-those who try to collect on the insurance for which they've paid premiums for years. It's the opposite of a loyalty program.

If you have multiple claims, forget about shopping around. In the current tight insurance market, no one will want your business. One Toronto Star reader told me he couldn't get a single company to quote him a rate when he tried to shop the market. With four vehicles insured, he and his family had made seven claims in the previous five years (two at-fault accidents, three not-at-fault accidents and two comprehensive claims). That's the kind of record insurers don't like to see.

Shop early
Make sure you get an early start on your insurance shopping. Don't wait until a week or two before the policy's renewal date. Give yourself three months, since that's how long it can take to get several quotes and do the paperwork.

You may have to shop around for brokers until you find one who can place your business. Many are so busy that they're not quoting rates over the phone. You have to see them in person in their offices. Don't agree to pay a fee for a broker to quote you a rate. If they don't find insurance for you, they may keep the fee (say $50) for their efforts.

If you can't get coverage from private insurance companies and you live in a province without a public insurance system, you have to go to non-standard insurers (companies that specialize in insuring high-risk drivers) or to the Facility Association, an industry-sponsored pool of last resort. The Facility's rates are very high, reflecting the degree of risk.

Take, for example, a 19-year-old male who's had one accident. He's the primary driver of a Chevrolet Cavalier and lives in Ajax, Ontario (outside Toronto). The lowest rate we found after shopping the market was $4,648 with Lombard Insurance. The highest rate was a whopping $16,470 with the Facility Association. For a 19-year-old female driver with one accident, the lowest rate we found was $3,365 with Lombard and the highest was $8,564 with the Facility Association.

New drivers
If you have teenagers in your household, don't forget to tell your insurance company if they will be driving your car occasionally. "They should be added to your policy as soon as they get a G1 licence," says Dave Stauffer, a partner with DeHart and Stauffer Insurance Brokers in Oshawa. (Ontario has a graduated licencing system, where beginners start by driving under supervision at all times.) "There's no extra charge when they have a G1 and it gives them some insurance history."

Encourage your kids to take a driver's training course, one with at least 25 hours in the classroom and 10 hours behind the wheel. This will give them a lower rate later on. And if they live in Ontario, taking a driver's training course will let them proceed to the next licensing level (G2) in eight months, instead of one year, after passing a road test.

After shopping around, we found the driver's training credit would reduce the car insurance premium from $2,444 to $2,311 (a saving of $133 a year) for a 19-year-old Toronto male with a G2 licence and no accidents. It would mean a $26 annual saving (from $1,390 to $1,364) for a 19-year-old female driver in Toronto.

Some insurance companies even give a price break to young people who have good marks in school. The idea is they'll be better drivers if they apply themselves to their high school or university studies. So, if your child has a good report card, ask the insurance company whether you can submit a copy and get a lower rate.

Changing companies
Suppose you decide to change insurance providers after shopping around and finding a lower rate. Don't cancel your old policy until your new insurance company confirms your coverage in writing. Otherwise, you could be left stranded - for example, if information turns up later that causes the new insurer to increase your quoted rate.

Also, try to make the switch right before your renewal date. If you wait too long and notify your insurer after the renewal date, you will be charged a penalty. One Toronto Star reader was told he had to pay $245 - about 10 per cent of the cost of his premium - because he was one day late in getting his paperwork done. The ombudsman at his former insurance company agreed the penalty was excessive for a one-day delay and waived it after we appealed his case.

You must notify your current insurance provider in writing if you decide to move. Don't think you can simply refuse to pay the renewal bill. If you don't provide written notification, you are still committed to that insurance and on the hook for the payment, Praskey says.

Save without switching
You don't have to switch to save money on car insurance. Try raising the deductibles, the portion you pay out of your own pocket before the insurance company covers the claim. I went through the exercise and got a $640 reduction in premiums for our two cars, amounting to a 25 per cent discount.

When I checked the policy (which I confess I hadn't done regularly), I found we had $300 deductibles on our collision and comprehensive coverage. I raised them to $1,000; that was where the big savings came in. Collision and comprehensive pay for repair or replacement of your car if it's stolen or damaged in an accident, or hit by a storm or natural disaster. The standard advice is to keep the deductible as high as you can afford. For me, $1,000 was an amount I felt comfortable paying out of pocket - not out of line with what I would pay for major mechanical repairs not covered by insurance.

More than our collision and comprehensive deductibles were woefully out of date. The third-party liability coverage, for example, was only $500,000. Every province requires a minimum of $200,000 (except Quebec, where the minimum limit is $50,000). Liability pays for property damage and bodily injuries caused by you or your vehicle to others. If there's a claim against you for more than your level of coverage, you can be held personally responsible for the balance.

I doubled the liability coverage on both cars to $1 million, figuring that was the key part of the policy. And it's not all that expensive to do. It costs an average $45 a year to raise your liability coverage from $500,000 to $1 million, says Lee Romanov, who runs a company that helps people shop for insurance (www.insurancehotline.com). To go from $1 million to $2 million costs an additional $45 a year.

Some people drop their collision coverage altogether for older cars. (This coverage is optional in all provinces except Manitoba and Saskatchewan.) That's because relatively minor damage could cost more to repair than what the vehicle is worth. But if you do so, be prepared to pay out of pocket to repair or replace your vehicle if you're hit by an unidentified driver - whether it's your fault or not.

Consider, too, that if your car is damaged in a hit-and-run accident, the only way for insurance to pay for that damage is through your collision coverage. "If you don't carry collision insurance, you will be stuck with the entire bill for an accident that wasn't even your fault," says Sally Praskey in The Insurance Book: What Canadians Really Need to Know Before Buying Insurance (sold through the Insurance Canada Web site). "Your only other recourse would be to track down and recover the money yourself from the driver who hit you - a challenge for even the most intrepid P.I. And don't look to your insurance company to help you. You're on your own."

Some easy tips
Remember that if you lease your car or you've taken out a bank loan to buy it (which you haven't paid off), you have no choice. You must carry collision coverage. This protects the leasing company or bank lender from having to shoulder the cost of repairs if you don't.

Another possible saving: Remove the coverage for rentals if your car is damaged. You can get by if you live near public transit or you have several cars in the family. (That's another cut I made to our policy.)

Leave your car at home during the day. You'll save about $145 a year in insurance costs by not driving to work, assuming you commute 10 to 20 kilometres, Romanov says. You can save $275 a year if you give up a 30-kilometre daily commute.

Use the same company for both your home and car insurance. That can get you a loyalty discount of 5 to 10 per cent a year.

Driving safely saves you money. Your rate probably won't go up if you get a ticket for speeding, making an illegal turn or not buckling up. But with two tickets, your annual costs can rise from $250 to $1,000. One at-fault accident can increase your rates by $1,000 to $5,000 a year. Two accidents can increase your rates from $3,500 to $6,000 and stay on your record for six years.

Taking a driver's training course can improve your skills at the wheel and get you an insurance discount, too.

Location, location, location
Where you live often makes a difference in what you pay for car insurance. One of my readers discovered that when he changed addresses in Toronto, the insurance went up $1,000 a year for him and his wife. He went online to compare insurance rates and found he always got higher quotes when he put in his new postal code. "For moving 10 minutes away, I have gotten punished on insurance rates," he says about his new home, which is closer to the busy and accident-prone 401 highway. This means he's more likely to get into an accident and make a claim.

The Ontario government has promised new legislation outlawing this practice, but price discrimination based on location is legal when it comes to car insurance. Drivers in larger cities pay more. There are more cars on the road and more accidents - and also a greater likelihood of getting your car stolen.

Take, for example, a married couple, age 35 and 38, who own a 1998 Ford Taurus and drive less than 16,000 kilometres a year. They've had no accidents or driving convictions in six years. They'll pay about $1,430 a year for car insurance if they live in Toronto, compared to about $937 a year if they live in London, Ontario. This couple could try driving the car only for pleasure (and not taking it to work). This would save them $75 a year.

Short of moving to a safer area, there are a few other ways to cut costs. Reducing your annual mileage can help. The more time you spend on the road, the greater your chances of getting into an accident.

A few more suggestions
Ask for discounts. Brokers often give you a break if you insure several cars or family members with them. It helps to bundle several types of insurance (auto, home, life and business). You might get a premium reduction of 5 to 15 per cent if you've installed a theft deterrent system in your car or if you're a low-mileage driver or an older driver.

Drive a car that's less expensive to insure. The Vehicle Information Centre of Canada (www.vicc.com) looks at the claims history of different makes and models - including accident frequency, repair costs, theft, vandalism and safety ratings.

Keep your insurance provider informed of major changes in your life. Some things that might improve your insurance profile and cut your premiums, says Praskey: You move to a less populated area; you change jobs and commute fewer kilometres to work; you buy a new car that has a better insurance rating; you start a home business and no longer drive to work; you reduce the number of drivers in your household.

Finally, don't make small claims if you can avoid doing so. Police must be informed if you're in an accident that causes $1,000 or more in damage to your car or to another vehicle. Then, once you have notified the police, you must report the accident to your insurance company within seven days. But if the damage to your car is less than $1,000 - as long as you haven't damaged someone else's car or injured anyone - you're probably better off not to claim for the accident. That way, it won't go on your record and your premiums won't go up.

You'll have to pay the deductible on your collision coverage anyway. How much extra will it cost to pay for all the repairs yourself? You'll save more in the long run by keeping your insurance record unblemished so your premiums won't increase.

Here's the key point many people don't realize: It's not the amount paid out by the insurance company that counts against you, but the question of fault. "Therefore, an at-fault claim of only a few hundred dollars will count against your insurance record in much the same way as a catastrophic at-fault accident would," says Praskey.

Insurance is there to cover the big losses you couldn't afford otherwise. So pay for the minor repairs yourself and keep your insurance for when you really need it.

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Excerpted from Money 201 by Ellen Roseman. Copyright 2003 by Ellen Roseman. Excerpted, with permission by Wiley Publishing. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.