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5 facts to discover when buying car insurance


Getting auto insurance, or even renewing your policy once a year, is a job that most people don’t enjoy. For this reason, they rush through it and spend as little time as possible. The problem is that it’s easy to make small mistakes that can lead to significant costs later on.

It’s worth slowing down and checking out the details. Take the time to ask your insurance broker any questions that may affect the type of coverages you buy and the amounts you buy. The information you discover may even prompt you to switch to another auto insurer. Below are five details to discover when seeking cover or renewing your policy.

#1 – What Auto Insurance Do You Need?

Some coverages are mandatory in almost every province and territory (although the minimums required vary). This is the case with Accident benefits, third-party liability insurance and coverage for uninsured/underinsured motorists. Other coverages are optional. While they are valuable to have in certain circumstances, they end up costing more than they are worth. You can drop them and lower your auto insurance rates.

Think, for example, of collisions and extensive coverage. The first covers damage resulting from an accident. The latter covers damage from non-accidents, such as a tree falling on your vehicle. If you’re driving a new $80,000 BMW 7 Series, it’s a good idea to carry collisions. On the other hand, if you drive a 1997 Toyota Corolla with a market value of less than $2500, these coverages may be too expensive.

When do you draw the line on collision and extended? As a general rule, you do this when their combined annual costs exceed 10 percent of your vehicle’s value.

#2 – Are you driving a “risky” vehicle?

Auto insurers in Canada refer to the Canadian Loss Experience Automobile Rating (CLEAR) system when calculating their policyholders’ rates. This is a score that indicates how likely it is that your car (based on make, model and year) is part of a claim. It also reflects how expensive that claim is likely to be. The CLEAR ratings are based on historical data that has been collected for years.

It’s worth finding out if a potential auto insurer considers your vehicle “high-risk.” If this is the case, your rates will likely be higher than usual.

#3 – Discounts you qualify for

Nearly every auto insurance company grants discounts to their policyholders. Unfortunately, most policyholders fail to verify their eligibility. Examples include discounts for a good driver, installing an alarm system in your vehicle, and consolidating your auto and property insurance policies with the same company. These and other standards can lower your premium.

A “good driver discount” can be automatically added to your policy (but don’t assume it). Your insurer has access to the information it needs to make this decision. Other discounts remain unclaimed until you investigate.

#4 – Type of Used Replacement Auto Parts

Suppose you are involved in an accident in which the alternator of your car is damaged. It must be replaced. Some auto insurance companies pay for original manufacturer parts (OEM). These are made by the automaker to their own specifications. Other insurers only cover the cost of remanufactured parts, the quality of which can range from good to bad. A poorly rebuilt alternator could leave you stranded in the future.

Ask your insurer or insurance broker to clarify what type of replacement parts are covered. Keep in mind that OEM parts generally offer higher quality but cost more. This will likely be reflected in your premiums.

#5 – Are there lower rates available elsewhere?

Never assume that your auto insurance company offers the lowest rates. In many cases, competing companies will be able to match your insurer’s quote while offering more comprehensive coverage. Or they can give a lower quote. Most consumers simply renew their policy without taking the time to look for lower premiums. As a result, they pay more than necessary.

Whether you’re switching to another insurer or renewing your policy, compare quotes from different carriers. You may find a cheaper package of coverage elsewhere.

Few people enjoy the process of buying car insurance. But discovering a few key details can save you hundreds and even thousands of dollars in the long run.


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