4 Important decisions to make about your car insurance

Buying car insurance seems like a no-brainer: you just need to find an insurer and make your monthly payments, right? Before signing any paperwork, there are a few important decisions you should make about your insurance coverage, such as:

1. Choosing an insurer. The most important decision you’ll make about your car insurance is choosing the right insurer. Different providers offer different prices and plans – even for the same car and driver. Compare at least three quotes before choosing your insurer; many websites allow you to do this easily online.

Don’t just pick the cheapest option; consider the amount of coverage offered, the cost of the deductibles, and differences in liability limits. Some plans might include bonus perks, such as roadside assistance, rental car coverage, accident forgiveness and disappearing deductibles. Online reviews can also give you an idea of how easy it is to make a claim with each provider. After you’ve looked at all the information, the cheapest option might not offer the most value for your money.

2. Determining your coverage level. In each province, some types of coverage are legally required, while others are optional. For example, in Ontario, drivers are required to purchase Third-Party Liability Coverage, Statutory Accident Benefits Coverage, Direct-Compensation-Property Damage Coverage, and Uninsured Automobile Coverage. You might decide that you need additional coverage to customize your policy.

For example, if your family exclusively relies on your paycheque, you might add Income Replacement Benefits to your policy to replace your income if you were unable to work due to a collision. On the other hand, you might drop collision coverage from your policy if insuring your older car costs more than it would to replace it in an accident.

3. Finding the best payment plan. Some insurers will allow you to pay your premium in one lump sum at the beginning of your term, rather than in monthly installments. While it does mean paying a larger amount upfront, you could earn up to 9 percent off the overall cost of your insurance. In addition, you can agree to pay a higher deductible – the amount of money you pay if you make a claim – for a lower premium payment. This is a good option if you have an established emergency savings fund to cover unexpected costs. If you make infrequent claims on your insurance, you’ll probably save money in the long run.

4. Deciding to share your driving information. How much personal information would you share in return for a lower premium payment? Drivers who adopt a Usage-Based Insurance (UBI) plan agree to install a device that tracks their driving behavior (such as acceleration and braking) and reports it to their insurer. If you choose to sign up for a UBI plan, you could receive an immediate discount to your premium, and up to 30 percent in savings when it’s time for renewal. If you’re worried about how your insurer will use your information, research your provincial regulations. For example, in Ontario, the Financial Services Commission of Ontario protects drivers who sign up with UBI with a set of rules, including that driving data can’t be used to decline, cancel or increase the cost of insurance coverage.

The decisions you make about your car insurance will affect how much money you pay, how much you save, and how well you’re covered in the event of an accident. Do your research and weigh your options carefully so you can find the most appropriate policy for you and your car.