Our original idea for this post was to write about how you can save money on car insurance by spending a little cash up-front on minor upgradessafety features, anti-theft devices, etc. After doing a little digging, it turns out that in 2010, with so many of those items coming standard on every new vehicle model, your ability to reduce premiums by loading up on options are pretty limited.
But thats not say there arent other ways to reduce your premiumsmost of them just require a little before-you-buy strategizing and consideration of exactly how youll be using your car. Depending on which of the factors listed below apply to your situation, you could end up shaving hundreds of dollars a year off your insurance premiums.
In no particular order then, some of our favourite ways to knock off a little or a lot from your auto insurance bill.
Buy a better car
This is easily the single largest factor in determining insurance rates.
Maybe youve heard that the Honda Civic (specifically, the 2000 Civic SiR two-door) is the number one most stolen vehicle in Canada. Its drivers pay correspondingly higher premiums than the driver of say, a 2003 Cadillac DeVille, the least stolen car in Canada.
But wait, you might be saying. It stands to reason that a common vehicle such as the Civic would be stolen more often than a luxury vehicle like the DeVille. There are simply a lot more Civics out there. Well, insurance companies take that differential into account when calculating rates, using a system called the Canadian Loss Experience Automobile Rating (CLEAR). The formula is not based solely on the number of thefts, but the number of thefts divided by the number of vehicles that exist.
Obviously the budget-smart solution here is not to buy a Cadillac DTS (the current incarnation of the DeVille, starting price $56,535) rather than a Civic (starting price $15,990.) But depending on which province you live in, your vehicles CLEAR rating accounts for between 50 to 80%of the cost of your insurance meaning it may well be a good idea in the long run to go for a higher-rated vehicle, even if its somewhat more expensive.
You can look at CLEAR ratings for all vehicles between 1996 and 2008 model years here. http://www.ibc.ca/en/Car_Insurance/Buying_a_New_Car/HCMU.aspModels dont tend to jump around the ratings year to year much, so this is a reasonable guide to the most current models. But talk to your insurance company about the most up-to-date information.
After-market add-ons will bump up your theft risk
That giant subwoofer sitting conspicuously in your rear window may sound great, but its like a steal me sign for thieves. Likewise a DVD player, a non-stock spoiler, an enhanced engine, or even tinted windows.
Logically, any after-market product that increases the value of your vehicle is going to increase the cost of insurance, but even if your policy doesnt cover aftermarket products, your rates will still go up because your car is now a more attractive target for theft.
Consolidate your policies
If you and your spouse/partner both own a vehicle, and theyre insured under different policies, consider consolidation. Many insurance companies will reduce your premiums by up to 10%. If youre a homeowner, you may be able to get an even greater reduction by consolidating your home, vehicle and life insurance into one policy.
Commute by transit
If you can commute to work by public transit, do so. Auto commuters over the age of 25 pay premiums around 15%higher than non-commuters who use their cars strictly for pleasure. A years worth of transit passes runs from $700to $1400a year, depending on where you live. but factoring in the insurance savings, not to mention savings on gas and maintenance, you could end up thousands of dollars into the black if you leave your car at home.
When you rent a vehicle, whether a car, a moving van, or anything else, youll end up paying the rental agencys collision insurance, usually around $50or more. That is, unless you have rental collision protection on your own policy, which will cost about the same as the price of insurance for one rental. If you rent twice a year or more, youre already seeing savings.
Hold off on claims
Small claims, at least. Say youre involved in an at-fault accident resulting in $700worth of damage. If your deductible is $500, youll only save $200by making a claimand your rates may go up 10%or more. It may be more cost effective to pay out of pocket.