12 Hacks to Lower Your Auto Insurance Rates

Auto insurance premiums can be very expensive - especially in Ontario. FSCO reported that rates increased 2.06% on average in the third quarter of 2018. Depending on who you are insured with, you may see your premium increase anywhere between 2.5% to 11.6%. 

According to FSCO, the two trends that are affecting the rates in Ontario are: 1. increased claim costs for repairing technologically advanced vehicles, and 2. more collisions due to distracted driving. 

Nevertheless, there are still ways to lower your premium. Here are some tips that insurance companies look at that affect the premium they give you:

 

1. Buy a car that is cheap to insure

Consider rates on various cars before buying. According to Forbes, the five cheapest cars to insure are:

1. Subaru Forester 2.5i AWD
2. Jeep Patriot Sport 2WD
3. Buick Encore 2WD
4. Jeep Cherokee Sport 2WD
5. Subaru Outback 2.5L AWD

Insurance companies base their rates on the frequency of claims or issues received with a particular car model. The more claims they receive, the higher the insurance premium.

The information used to determine the cheapest cars to insure can often also be a good indicator to you of the cheapest cars to maintain and service.

2. Get a broker

The best way to get cheap car insurance is to shop around. Yet, so few people do it! A broker will shop around for the best rate from various insurance companies. Brokers usually score better rates due to the partnerships they form with each insurance company. However, not all brokers are made equal. Check if the broker is partnered with multiple insurance companies - the more partnerships, the better. Having a broker who knows the industry can certainly help, and it won’t cost you anything! A recent study by J.D. Power found that customers could save almost $400 per year by getting a good broker to help on insurance rates.

3. Bundle your policies

Bundling car insurance with homeowner's insurance saves an average of 16%! Based on the 91% of car/renter's insurance bundlers who renew their policies, the savings and convenience of having more than one policy with the same insurer is well worth it. If you purchase a home, add homeowner insurance to your existing auto policy for great savings.

4. Add another car to your policy

The more cars on one policy, the more savings you get. Similar to bundling homeowner insurance with auto insurance, adding additional cars to your policy can save money compared to having separate policies for each car. For example, some insurers offer up to 25% off if you insure more than one car.

5. Contact your insurer as you reach life milestones

Take advantage of life's milestones with car insurance savings. Turning 25 can save you up to 40% on your premium, while getting married means you can combine policies with your spouse, granting you multi-vehicle savings.

6. Add a parent to your policy

A cheaper rate for a new driver is possible with an older person on your policy. Adding a parent to your policy can save you thousands, and you can thank them by driving to the store to pick something up whenever they ask.

7. Prove you are a good driver

Most insurers provide discounts for drivers with no claims or violations within the past five years. Some offer up to 26% discount on most coverage if you have been accident-free for five years.

Insurers are now using "telematics" to track safe driving behavior that can cut rates by up to 50%. Telematics is a new, compelling technology that may revolutionize the way insurers calculate premiums in real time.

8. No payment lapses

A major factor in good financial management is staying current with your payments. This applies to all bills, creditors, and utility payments. When you stay current you are building a record of on time payment history which bodes well in your favor. It shows you are reliable and responsible. On the other hand, if you frequently miss payments or make late payments this negatively affects your credit rating. The consequences are even more severe for missing an insurance premium payment. This can lead to a cancellation of your policy, which forces you to start a new policy (typically at a higher rate). In some cases the insurance company may refuse to insure you. To avoid this risk, make those auto insurance premium payments on time. There is also a discount off of the premium balance if you pay for the full term upfront instead of on a monthly basis.

10. Location is key

You wouldn’t think this would be a primary factor in determining your auto insurance rate, but with all insurance it comes down to evaluating the risk of each aspect. If you live in a highly populated area (such as a city) there is a higher risk of an incidence occurring here and therefore auto policy rates are higher. While in rural areas the rates will be cheaper. Consider where you live before starting your auto policy.

11. How often will you drive your vehicle?

The same as with location, a vehicle that is used more frequently has a higher chance of an incident occurring and is considered higher risk. An incident can be a car accident or moving violation of any sort. Some insurers may not ask this outright. You may need to specify to them what you intend to use the vehicle for and how often (i.e., ‘I plan to drive it only on the weekends’).

12. Downsize Your Car

The bigger and more expensive your car is, the more it will cost to insure. If affordable insurance and great coverage are what you seek, you’ll have a very difficult time finding that with a large vehicle. Consider getting a smaller car to appease your tighter budget.

14. Pay Insurance Premiums Yearly

Nowadays, most people choose to pay their premiums monthly to break up the payments. However, you end up paying more in the long run with this method of payment. By paying your premiums annually, you can save several hundred dollars a year.

 

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