Buying a Policy & Saving Money

How do I choose an insurance company?
There are many insurance companies, so choosing between them can be a challenge. Here are the main points to keep in mind when selecting an insurance company:

Not every company is licensed to operate in each area. As a general rule, you should buy from a company licensed in your province, because then can you rely on your the insurance regulator in your area to help if there’s a problem.

Many companies sell insurance policies and prices vary greatly from one to another, so it really pays to shop around. Have your independent agent get at least three price quotes from companies.

You buy insurance to protect you financially and provide peace of mind. Select a company that is likely to be financially sound for many years, by using ratings from independent rating agencies.

Your insurance company and its representatives should answer your questions and handle your claims fairly, efficiently and quickly. You can get a feel for whether this is the case by talking to other customers who have used a particular company or agent. You may also want to check a national claims database to see what complaint information it has on a company.

You should feel comfortable with your insurance purchase, whether you buy it from a local agent or directly over the phone. Make sure that the agent or company will be easy to reach if you have a question or need to file a claim.

If your net worth is more than $500,000, consider buying additional liability insurance. You may also consider purchasing an umbrella or excess liability policy. These policies pay when your underlying coverages are exhausted. If you have your homeowners and auto insurance with the same company, check out the cost of coverage with this company first. If you have coverage with different companies, it may be easier to buy it from your auto insurance company.

How can I save money?
The price you pay for your auto insurance can vary by hundreds of dollars, depending what type of car you have and the insurance company you buy your policy from. Here are some ways to save money.

Prices vary from company to company, so it pays to shop around. HAve your agent get at least three price quotes.

But don't shop by price alone. You want a company that answers your questions and handles claims fairly and efficiently. Ask friends and relatives for their recommendations. Contact your state insurance department to find out whether they make available consumer complaint ratios by company.

You can also check the financial health of insurance companies through independent rating companies and by consulting consumer magazines.

Select an agent who takes the time to answer your questions. Remember, you'll be dealing with this company if you have an accident or other emergency.

Before you buy a new or used car, check into insurance costs. Your premium is based in part on the car’s sticker price, the cost to repair it, its overall safety record, and the likelihood of theft. Many insurers offer discounts for features that reduce the risk of injuries or theft. These include air bags, anti-lock brakes, daytime running lights and anti-theft devices. Some states require insurers to give discounts for cars equipped with air bags or anti-lock brakes. Cars that are favorite targets for thieves cost more to insure. Information that can help you decide what car to buy is available from the Insurance Institute for Highway Safety.

Deductibles represent the amount of money you pay before your insurance policy kicks in. By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $500 to $1000 could reduce your collision and comprehensive coverage cost by 15 percent to 30 percent. Going to a $2,500 deductible can save you 40 percent or more.

Consider dropping collision and/or comprehensive coverages on older cars. It may not be cost-effective to continue insuring cars worth less than 10 times the amount you would pay for coverage. Any claim payment you receive would not substantially exceed your premiums minus the deductible. Claims occur on average only once every 11 or 12 years. Auto dealers and banks can tell you the worth of a car, or you can look it up online, at the Canadian Black Book or the Kelley Blue Book in the US. Review your coverage at renewal time to make sure your insurance needs haven’t changed.

Many insurers will give you a discount if you buy two or more types of insurance from them. Also you may get a reduction if you have more than one vehicle insured with the same company. Some insurers reduce premiums for long-time customers.

Some companies offer discounts to motorists who drive a lower than average number of miles per year. Low mileage discounts can also apply to drivers who carpool to work.

Some companies offer reductions to drivers who get insurance through a group plan from their employers.

Your credit rating may affect what you pay for insurance, so keep a close eye on it. Credit makes insurance rates more accurate, fair and objective. While the use of insurance scoring varies from company to company, it is a fact that drivers with long, stable credit records have fewer accidents than drivers who don't. There are various Internet services that allow you to check your credit rating and provide tips on how to improve your score.

Companies offer discounts to policyholders who have not had any accidents or moving violations for a number of years. You may also qualify for a cut if you have recently taken a defensive driving course.

You may get a break on your insurance if you are over 50 or in some cases 55 and retired or if there is a young driver on the policy who is a good student, has taken a drivers education course or is at a college, generally at least 100 miles away. When you comparison shop, inquire about discounts* for:
- $500 deductible
- $1,000 deductible
- More than 1 car
- No accidents in 3 years
- No moving violations in 3 years
- Drivers over 50-55 years of age
- Driver training course
- Defensive driving course
- Anti-theft device
- Low annual mileage
- Air bag
- Anti-lock brakes
- Daytime running lights
- Student drivers with good grades
- Auto and homeowners coverage with the same company
- College students away from home
- Long-time customer
- Other discounts
*The discounts listed may not be available in all areas or from all insurance companies. But don’t forget that the key to savings is not the discounts but the final price. A company that offers few discounts may still have a lower overall price.