May 3, 2010

Move to the country to save on car insurance

A 2009 Mercedes C class and 2009 Smart Fortwo in a frontal offset car-to-car crash test. Along with maintaining a good driving record, motorists who live in the country and have a car alarm in their vehicles enjoy lower rates than urban dwellers, Garry Marr notes.I think of my car insurance like a utility bill. I have to pay it. My only other choice is to sell my car and take the bus. Frankly, I’d rather freeze in the dark.
That car-or-bust attitude leaves me at the mercy of auto insurance companies who can jack up my rates at their discretion. Every traffic accident or traffic fine is not just an immediate hit on my household income, but a potential black mark for years to come.
But even with a perfect driving record, can I escape rate hikes? The perception among most consumers is that car insurance rates are always on the rise.
They are basically right. Automobile insurance rates were up 5.5% in March from a year ago, says Statistics Canada. The overall consumer price index was up only 4% during the same period.
Go back a decade and you’ll find auto insurance prices have risen 67%, while the consumer price index is up about 22% over the same time frame.
“We are pretty much sitting at a high level. It’s not the all-time high, but pretty close,” said Daniel Cheung of StatsCan.
Is there anything you can do about it?
“You can shop around,” says Jim Davidson, a car broker and owner of carsmart.ca. “I suggest you should contact insurance companies directly if you are looking for the cheapest quote you can find.”
That advice seems a little strange — a car broker suggesting people avoid insurance brokers. “Yes, it’s a little funny for me to say. Their rates are a little higher, but people get other advantages from dealing [with insurance brokers]. It’s one-stop shopping for all your needs. ”
He suggests that before you even buy your car you should try and get an estimate of what the insurance will be on the vehicle. “You can do all that online now,” says Mr. Davidson, who also advises customers on what cars are considered by insurers as high risk.
There may be no way to avoid accidents, but you can prevent them from becoming part of your driving record. “Pay for the little stuff out of pocket,” says Mr. Davidson.
Anything under $1,000 counts as little stuff. And since you are paying for everything under $1,000, the deductible — the amount of money you have to pay out-of-pocket before making a claim — should be less than $1,000.
Henry Blumenthal is vice-president and chief underwriter at TD Insurance. He says his company is what is called a “direct response insurer” with no intermediary. You can get a quote over the phone. “I encourage Canadians to do that,” Mr. Blumenthal says. “It’s a very easy process.”
He says there are a number of factors that determine your auto insurance rate, starting with where you live.
“It depends on what we project in terms of accident risk and severity and all those things,” he says, adding rates are lower in rural areas than congested cities.
Insurers can also bundle services together. Tying your house and car insurance together with the same company can save you money on both policies. “It also helps you avoid confusion,” says Mr. Blumenthal. “You are dealing with one company and one payment.”
Anti-theft systems in your vehicle are another way to lower your premium. “In Quebec, it can lower your premium by up to 25%. If you are in Montreal, you are close to the port, the most exposed area [in Canada] for auto thefts. Thieves put the cars in a container and they are gone. We’ve seen our cars show up in Africa and they haven’t even taken the plate off,” Mr. Blumenthal says.
What about sex reassignment surgery? “As a general concept, females are better drivers than males,” says Mr. Blumenthal, adding there is one age group among females that is considered higher risk, but he won’t identify the group.
So, I can move to the country, get a cheaper car, pay for an alarm system, get a sex change — or watch my rates go up. At least I can shop around.
Dusty wallet: If you drive your car during working hours as part of your job make sure you’re insured for it. If you are not compensated for mileage, try and get your employer to help with that extra insurance. They might be willing because of their own potential liability.
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