How we cut our car insurance bill by 30 per cent: Mayers

Promised car insurance cuts are on hold because of the Ontario election. That doesn’t mean you can’t find ways to save on your annual bill.

By: Adam Mayers Personal Finance Editor, Published on Sun May 11 2014

A year after the Ontario Liberals were prodded by the NDP to give us a 15 per cent cut in provincial car insurance rates, we’ve seen a 6 per cent average reduction with the promise of more to come.

But will it ever happen? It all depends on who wins the provincial election.

For a GTA driver, anything that cuts the cost of car insurance is good news. We pay the highest rates in Canada, with an average cost per car of $1,500 a year.

But rather than wait for a politician to make good on a promise, you can always help yourself.

We’ve reduced our car insurance bill by $806 in the past six months. The annual bill for two cars has come down from $2,702 to $1,901, a 30 per cent saving.

We did it by removing unneeded coverage and our circumstances may not be that different from many families with kids in college or university, or where one spouse has recently retired. It all came down to being aware things had changed and doing a little research.

Our cars are insured with TD Meloche Monnex and when the policy was renewed in November, I made an annual call. How could we reduce the cost? The agent couldn’t find anything at first, but when we went over the policy line by line, it came up that my wife was no longer driving a short distance to work every day. That saved $102.

This winter while doing research for an article on car insurance, an industry contact suggested removing both adult children as occasional drivers — something others had suggested was a bad idea since our son is a student.

Occasional drivers aren’t the primary driver, but use the car a lot — typically students and young adults who live at home. If you remove the designation, they can still use the car in the same way you can lend your car to a neighbour. They just can’t live at home.

If an occasional driver has an accident, the penalty goes on their record not yours, says Pete Karageorgos at the Insurance Bureau of Canada. If they are not an occasional driver, the claim goes on your record and affects your rates.

It gets tricky with students. Even if they are away for eight months, they technically still live with you. If you take them off the policy and something happens during the summer, the insurance company probably won’t pay.

We had been led to believe that was why we should keep our son on the policy. He is 21, and a third year student at the University of Toronto. He shares a house in the city and this summer is again working out West between May and August.

Our 23-year-old daughter moved out last fall when she landed a job in downtown Toronto. She has her own apartment.

All this was explained to a TD Meloche Monnex customer service rep. He said it was a bad idea to take Ben off the policy, because if he was in an accident, TD Meloche Monnex might not pay.

The annual saving by only taking my daughter off the policy was about $75. How come?

 “It’s a simple question with a complex answer,” admits Rob Bull, manager of TD Insurance’s client service centre in Toronto.

Statistically, young males are a higher risk than young females and it didn’t matter that our son has a clean record. Each insurance company calculates the risk differently based on where the young person lives, the company’s claims experience and the type of car being driven.

“Students are a grey area,” Bull said. “If your son doesn’t live at home, you can remove him. (In case of an accident) you could be asked to prove it, but it would be easy to establish. If he’s a student returning home for the summer, we wouldn’t advise it.”

We took both kids off the policy, and if Ben ends up living at home again, we’ll put him back on.

Here are some lessons:

Always ask for a better deal . Your insurer’s best interest is to have you pay more, not look for savings. So go over the policy line by line if you have to. If you don’t use a broker, remember the call centre rep doesn’t know anything about you and what might have changed in a year.

Always shop around: Make it a habit to compare quotes at renewal. Over the years, we’ve insured with Co-operators, Dominion, Aviva and now TD. The Internet makes this easy with websites like Insurancehotline.com and Kanetix . You’ll be surprised how much rates vary.

Call centre reps aren’t experts . They have a manual and training that may be hit or miss. If you’re not happy push your case up the line until you are.

Reach Investing & Personal Finance editor Adam Mayers at [email protected]