Stop overpaying for car insurance: 8 ways Canadians can cut their rate

Here are eight ways to help Canadians save money on car insurance.

1. Shop around

Although auto insurers use similar factors — age, driving history and location — to calculate your premium, they weigh these factors differently. That’s why comparing quotes matters.

Rates can vary by hundreds of dollars a year for the same coverage.

In private insurance provinces such as Ontario, Alberta and the Atlantic provinces, you have access to multiple competing insurers and brokers.

In provinces with public auto insurance — British Columbia through the Insurance Corporation of British Columbia (ICBC), Manitoba through Manitoba Public Insurance (MPI) and Saskatchewan through Saskatchewan Government Insurance (SGI) — mandatory basic coverage comes from a single government provider, but optional coverages may still be available through private insurers.

In private markets, getting quotes from at least three to five companies once a year is a good starting point. Rates at renewal don’t always stay competitive, and switching insurers can deliver meaningful savings.

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2. Take advantage of car insurance discounts

Most insurers offer a range of discounts that can reduce your premium. Common options include:

• Bundling home and auto insurance with one provider, which can save 10% to 25% (2)
• Multi-vehicle discounts for insuring more than one car on the same policy
• Winter tire discounts are offered in provinces such as Ontario and Quebec
• Anti-theft device discounts for vehicles equipped with approved tracking or immobilization systems
• Loyalty or claims-free discounts for drivers with a clean history

Ask your broker or insurer to review all the discounts you may be eligible for. Just because a provider advertises many discounts doesn’t mean it will offer you the lowest overall price — always compare the final premium.

3. Drive safely

Speeding tickets, at-fault accidents, and other traffic convictions drive up your premiums. A rating surcharge for convictions and at-fault claims can stay on your record for six to 10 years, depending on the province.

If you receive a ticket, some courts allow you to attend a safe driving or traffic safety course to reduce demerit points — more points mean higher insurance premiums. Contact your provincial licensing authority to find out what options are available.

Auto theft is also a major driver of rising premiums across Canada. The Insurance Bureau of Canada (IBC), the national industry association representing Canada’s private home, auto and business insurers, estimates that auto theft adds about $130 to the average annual premium in Ontario alone (3).

4. Drop coverage you don’t need

Mandatory auto insurance in Canada varies by province, but it typically includes third-party liability, accident benefits and direct compensation for property damage. Optional coverages such as collision and comprehensive can be added, but you’ll pay more for this extra coverage.

To help, remember the following:

• Collision insurance pays to repair your car if it’s involved in a crash.
• Comprehensive insurance covers theft, vandalism, hail, flooding and other non-collision events.

Remember, if your vehicle is older and low in value, it may not be worth paying for both.

To help you assess, consider the following calculation: if your car’s market value is lower than your deductible plus what you pay annually for collision and comprehensive coverage, then these add-ons may not be cost-effective. That’s because collision and comprehensive never pay out more than the car’s actual cash value.

If you drop optional coverages, set aside the money you would have spent and put it into an emergency fund for repairs or as a down payment on a replacement vehicle.

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5. Drive a car that’s cheap to insure

The vehicle you drive directly affects your premium, particularly for collision and comprehensive coverage. Most Canadian auto insurers use the Canadian Loss Experience Automobile Rating (CLEAR) system to assess vehicles based on safety features, theft risk and the cost to repair or replace them.

The IBC’s How Cars Measure Up online tool lets drivers compare the insurance claim history of specific makes and models before buying. Safer, moderately priced vehicles — particularly small SUVs and sedans with low theft rates and inexpensive parts — tend to cost less to insure than high-performance or luxury vehicles.

Before buying or leasing a new vehicle, compare insurance quotes for the models you’re considering. A small difference in monthly insurance costs compounds into a significant amount over a three- to five-year ownership period.

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6. Increase your deductible

You can reduce your collision and comprehensive premiums by choosing a higher deductible — the amount you pay out of pocket before your insurer covers the rest.

For example, if you have a $500 deductible and your repair bill is $2,000, your insurer pays $1,500. Raising your deductible to $1,000 would lower your premium, but you’d need to cover more of any claim yourself.

Savings vary by insurer and province, so compare quotes at different deductible levels before deciding. Make sure you can actually afford to pay the higher deductible if you need to make a claim.

7. Understand how credit scores affect your rate

Unlike in the United States, where credit scores are commonly used to set auto insurance rates in most states, Canada’s rules vary significantly by province (4).

Ontario and Newfoundland and Labrador ban insurers from using your credit score to calculate your auto insurance premium.

In Alberta, insurers may use your credit score with your consent, but only for optional coverage — not mandatory basic insurance.