Most people hate the task of purchasing car insurance or renewing their policy every year. They rush through the process, trying to save as much time as possible. It’s easy for small errors to lead to costly consequences later.
It is worth taking your time and reviewing the details. Ask your broker any questions you may have about the coverages and amounts that you are purchasing. You may be able to switch to an auto insurance company based on the information you find. We’ll show you five things you need to know when you shop for insurance or renew your policy.
#1 – What Car Insurance Coverages Do I Need?
Nearly all provinces and territories have mandatory coverages, though the minimum requirements vary. This is the case with Accident Benefits, third-party liability, and uninsured/underinsured motorist coverages. Additional coverages can be added at an additional cost. They are useful in certain situations, but they end up costing more than they are worth. They can be dropped and your auto insurance rates will go down.
Consider collision and comprehensive coverages, for example. The first covers damage caused by an accident. The second covers damage caused by non-accidental events such as a tree falling on your vehicle. Comprehensive and collision coverage is recommended for a BMW 7-Series that costs $80,000. These coverages might not be necessary if your Toyota Corolla has a lower market value than $2,500.
What is the right line between comprehensive and collision? In general, you should do this when the combined annual cost of both is greater than 10 percent of your vehicle’s value.
#2 – Are you driving a “risky” vehicle?
When calculating rates for policyholders, Canadian auto insurers use the Canadian Loss Experience Automobile Rating system (CLEAR). Based on your vehicle’s make, year, and model, this score indicates the likelihood that your car will be involved in a claim. It also indicates how expensive that claim will be. CLEAR ratings are based upon years of historical data.
It is worth asking potential auto insurance companies if your vehicle is considered “risky”. Your rates will be higher if it does.
#3 – Discounts for which you qualify
Nearly all car insurance companies offer discounts to policyholders. Most policyholders don’t know if they are eligible. You can get discounts for being a safe driver, installing an alarm system in your car, consolidating your auto- and property insurance with the same company, or even getting a discount for being a good driver. These and other standard features can help reduce your premiums.
Your policy may automatically include a “good driver” discount. But, it’s not a guarantee. Your insurer has the information it needs for this decision. Other discounts are not available until you investigate.
#4 – Types of Replacement Auto Parts
Imagine that your alternator is damaged in an accident. It must be replaced. Auto insurance companies may pay for parts made by the original equipment manufacturer (OEM). These parts are manufactured by the automaker to their specifications. Some insurers won’t cover the cost for rebuilt parts. The quality may vary from good to poor. An alternator that is not well-rebuilt could leave you without power in the future.
Ask your insurance agent or insurer to clarify which replacement parts are covered. OEM parts are generally of higher quality but more expensive. Your premiums will reflect this.
#5 – Are lower rates available elsewhere?
Do not assume that your auto insurance company has the lowest rates. Many times, your insurer will offer a lower quote than a competitor that offers more coverage. They may even be able offer a lower quote. Many consumers renew their policies and don’t bother to search for lower premiums. They end up paying more than they should.
Compare quotes from multiple companies, whether you’re switching to another insurance company or renewing your policy. There may be a better package of coverages available elsewhere.
The process of buying car insurance is not something that people enjoy. However, knowing the right details can save you hundreds or even thousands of dollars over time.
