Five tips for renewing your auto insurance
According to a recent report from CBC News, more than two dozen insurance companies have received permission from the Financial Services Regulatory Authority (FSRA) to raise premiums in the months ahead.
The provincial regulator oversees the car insurance market and is responsible for evaluating and approving rate hikes. During the early pandemic, the FSRA approved zero rate increases in 2020 and only one in 2021. However, this year, the regulator has approved 31 rate increases, according to a public database on its website.
Larry Herscu, President of Seahold Legal Finance, says when you couple high inflation rates with higher auto insurance premiums, it is yet another financial hit for Ontario consumers. However, if you have to renew your car insurance soon, you can reduce what you pay without becoming “underinsured.”
- Shop around. Unlike British Columbia, which has a single public insurer, Ontario has a wealth of private insurance companies. Call around and compare plans and prices. “There are multiple comparison websites that can do the work for you,” says Herscu. “An insurance broker can also help find you lower premiums.”
- Choose coverage wisely. If you own an old car with little-to-no market value, purchasing optional add-on coverage like collision and comprehensive may not be worth it,” Herscu says. “If you own a 2005 car, it might not be possible to replace it after an accident.” Also, if you rarely drive, you can look for insurance plans that charge based on the amount you drive to save on rates.
- Bundle up. If you are not already using the same company for your auto and home/renters’ insurance, inquire about any discounts if you bundle your services. “Bundling your insurance policies can potentially save you money on your premiums and may make managing your insurance policies easier,” says Herscu.
- Increase your deductible. A deductible is an amount you are responsible for before your insurer starts paying out a claim. The higher your deductible, the lower the monthly premium, which could result in savings if you rarely drive and have a lower chance of making a claim, Herscu notes.
- Get winter ready. “Even if there were no discounts available, I would recommend all drivers have winter tires,” Herscu says. “That said, as of 2016, Ontario insurers must provide a discount — up to five per cent — to customers who install winter tires on their cars.” The exact amount varies by the insurance company, so Herscu recommends calling your insurance agent to find out more, as you may be required to provide proof.
An important caveat
While the above areas are simple ways to save on your insurance premiums, Herscu recommends not skimping on accident benefits.
“Accident benefits ensure you get the healthcare and financial support you need following a car accident, regardless of who is at fault,” Herscu says.
Statutory accident benefits are mandatory and included with all automobile policies. However, you can purchase optional coverage, which provides dependent care benefits, as well as increased income replacement and catastrophic impairment.
“At Seahold, we hear from a variety of clients who are struggling in the aftermath of their accidents. They turn to us for settlement loans to help pay their bills and pay for medical treatment while their lawyers fight for a fair settlement.”
If your income is reduced or stopped due to a motor vehicle accident, the impact that can have is devastating, Herscu adds. “You want to know that your insurer is going to take care of you, but it is crucial to know your policy and what it covers. If your accident benefits are inadequate, it is a devastating blow during an already tough time,” he says.
Larry Herscu is President of Seahold Legal Finance, a specialty lender focused on providing credit solutions to the legal sector, including its clients and service providers.