6 Ways Drivers Pay Too Much For Their Auto Insurance Coverages

You’re probably paying more for your car insurance than you should. Millions of people do this every year and end up spending thousands more to their insurance companies over the long-term. Nearly all cases can be controlled by the factors that could lower their rates.

Six areas are often overlooked by drivers, but they play a significant role in keeping their premiums high. You should review your policy if you’ve missed any of these items and contact your insurance company.

#1 – They make a habit of risky driving

A car accident can lead to significantly higher rates. Insurance companies that offer accident forgiveness may be able to lower your rates. Your premiums can rise if you drive recklessly. A ticket will be issued if you are caught driving while distracted or talking on the phone to a friend. If you are caught driving faster than the posted speed limit, you will also be issued a ticket.

Tickets are recorded on your driving record and can stay there for many years. They will raise your rates if your insurance company finds them. Keep your driving record clean and safe. This is the best way to keep your premiums low.

#2 – They keep their deductibles too low

Your deductible is the amount that you have to pay before your coverage begins. If your collision coverage has a $250 deductible, then you will need to pay that amount before your insurance company covers the rest (upto your limit).

Your premiums will go up if you have lower deductibles. They are often kept low to limit their risk of financial loss. They’re actually paying more upfront due to higher rates. Increase your deductibles and your premiums will fall.

#3 – They have inappropriate coverage

You need to have certain types of coverages, such as third-party liability, accident benefits, and uninsured/underinsured motorist coverage. They are required in all provinces (except Newfoundland and Labrador which do not require accident benefits). Some coverages, like comprehensive and collision, can be optional. It may be worth getting rid of one or both depending on your vehicle’s value.

Comprehensive and collision coverages can be very expensive. Both collision and comprehensive coverages can make up as much as half of your premiums. The amount you will receive in the event your car is totaled is not likely to be worth it if your car is older. If the annual cost of these coverages exceeds 10% of the car’s actual value, you might consider dropping them.

#4 – They drive vehicles with poor CLEAR ratings

Nearly all auto insurance companies use the Canadian Loss Experience Automobile Rating system (CLEAR). This helps them determine the insurance risk associated to covering a vehicle. This rating is based on the car’s claims experience in the past, as well as the cost of settlement. This rating can be used by insurers to predict the potential claims loss for the vehicle. Insurers will charge more for vehicles with low ratings.

You should ensure that the CLEAR rating of your car is positive if you are looking to buy a new or used vehicle. Your rates will go down if you keep other factors the same.

#5 – They Don’t Take Advantage of Deserved Discounts

Many discounts are offered by insurance companies that may reduce the premiums of policyholders. Many consumers ignore these discounts. Many consumers don’t ask if they are eligible and pay higher premiums.

You can get discounts for installing an alarm system, which reduces the chance of theft; taking a driver education class (improves driving skills); or simply being retired (older drivers tend to drive less). A discount can be earned for having multiple vehicles insured and consolidating auto and property insurance with one company. Call your insurance company to learn about the discounts available if you haven’t already.

#6 – They Neglect Other Insurance Companies

Comparing insurance companies is a great way to get lower car insurance rates. Insurance is a competitive and vibrant market. This encourages insurers to provide better service for customers. This means lower premiums for most people. Most consumers renew their policies every year, without looking for a better deal.

There are many things you can do to lower your auto insurance premiums. Many of the issues we have discussed can be quickly addressed.