Times You Can Alter Your Car Insurance Coverage

Classic Car

Every driver needs to maintain an auto insurance policy to drive on roads legally in Canada. But, there are a few occasions when you might want to downgrade your auto insurance coverage. From having a risky teen driver on your policy to that prized, classic car, here's when to decrease your insurance coverage - and when not to.

When it's a Good Time to Review Your Auto Insurance

There are times when you should look at reducing your auto insurance premium. From driving less frequently to older vehicles you don't drive daily, here's what you need to know.

You Have a Reduced Commute

If you’ve cut back your hours at work or started carpooling, it might be time to reprice your auto insurance. Often, people will simply renew their auto insurance and not factor in that they’re using their vehicles less frequently. However, if you’re driving significantly less than before, keep track of your odometer.

An Example

With your old job, you had a long commute and averaged 160 kilometres each week. With your new job, you rideshare and also have access to public transportation. Your commute is now only about 25 kilometres.

What To Do

Ask your insurer about a discount. If your current insurer doesn’t offer one, not to worry. You might be able to find discounts with other insurers.

Shop online for an insurance company that offers discounts for:

  • Reduced driving if you move closer to work, take public transportation or carpool
  • Reduced driving if you're retiring or already retired and driving less frequently
  • Telematics and Usage-Based Insurance policies to monitor your vehicle usage

You Have a New Driver or Teen Driver on Your Policy

Adding a new driver or teen driver and their car to your policy is a good idea if you want to bundle your insurance. You can only add a car to your policy if the car is registered to you, however, the downside of having a young driver to your policy is that teen drivers and new drivers are considered high-risk drivers. They present a greater risk to insurers and might have more accidents as they may not be experienced with defensive driving.

An Example

Your son is a new driver and while you stress that he doesn’t speed, he’s received several speeding tickets, citations or a DUI.

What To Do

Instead of adding a teen or new driver to your policy, let them start their own coverage. If the rates look high, do an online comparison and look for ways to lower their insurance:

  • Have them take a defensive driving course
  • After a year of good driving, ask for a discount
  • If they have good grades, ask for a discount
  • When they turn 25, ask for a discount

You Have Antique Cars or Supercars You Don't Drive Every Day

Your antique car collection or those supercars you’re storing in the garage might be raising your premiums. And, you might benefit from a change in coverage. Here’s an example.

An Example

You have an antique car and a restored car that you’ve been working on. You don’t drive them and you’ve kept all the repair records on them.

What To Do

If you don’t drive these cars every day, contact your insurance broker or agent to reprice your coverage. While you’re at it, comparison shop for auto insurance. And, look for an insurer that specialises in classic cars or supercars.

Insurers that specialise in antique cars or supercars may offer specific discounts and they can help determine the exact amount of coverage you need. These insurance professionals are also helpful if you need to file a damage claim. They may know about replacement parts for antiques or offer assistance with repair services.

You've Saved Up Your Deductible Amount

This isn't lowering your coverage but it can lower your premiums. If you have enough in savings for your insurance deductible, you might consider raising your deductible amount to lower your monthly or annual rate. Here's an example.

An Example

You have a $250 or $500 deductible and raise it to $1,000 because you have money saved if you need to cover the deductible when filing a claim.

Why This Works

Once you have enough in savings to cover your deductible, contact your insurer about raising your deductible amount. This will lower your monthly or annual premiums. Raising your deductible from a $250 limit to $500 might lower your collision and comprehensive premiums by as much as 5 percent. If you raise your deductible to $1,000, it might lower premium for collision and comprehensive rates by as much as 10 percent or higher.

Your Vehicle is Getting Older and You Don’t Drive It Every Day

Your full coverage insurance will likely include collision and comprehensive. But, if you’ve had your car or truck for several years, you might want to drop the comprehensive and collision coverage.

Comprehensive includes coverage for:

  • Fire, thefts and vandalism
  • Damage if an animal (deer, moose) strikes your vehicle
  • Weather-related damage

Collision insurance will cover:

  • Damage to your vehicle caused by an accident that is your fault
  • Damage caused to your vehicle by a hit and run

For older vehicles you don’t use for your work commute, it might suffice to only have liability coverage. Factor in that if your vehicle was damaged in an accident, the repair bill might be higher than the car’s current value. Here's an example.

An Example

You have a car that’s approaching 321,868 kilometres. Your family doesn’t drive it and you only take it out on weekends to let the engine run. The car is damaged in a fender bender and will require extensive repairs.

What To Do

Consider the vehicle's value. If the actual value for your car or truck is lower than 10 times what you pay in insurance rates, it might be better to lower your coverage. If your vehicle is valued at $5,000 and you have a $1,000 deductible, if an accident occurs, your insurer can only pay a maximum of $4,000. The remaining $1,000 is the deductible amount you would have to cover.

If your premiums for collision are over $400 annually, it might be better to lower your coverage to liability. Hence, lowering your coverage to liability-only might save you a few hundred dollars or more on your policy.

When It's NOT a Good Time to Lower Your Auto Insurance Coverage

There are occasions when you might not want to reduce your coverage to liability-only. From vehicles you just paid off to cars you now make your primary vehicles, here's what you need to know.

You’ve Paid Off Your Vehicle

Some people will choose to lower their insurance coverage to liability-only once their vehicle is paid off. Maybe you have a clean driving record and don’t live in a high-risk area where there are a lot of damage claims from traffic accidents or animal crossings that contribute to accidents. But, if you switch to liability-only, will you have enough to cover damages? Here's an example.

An Example

You have a vehicle that's worth $40,000 after you've paid off your auto loan. You're in an accident that totals the vehicle. Will you have the full amount to replace it?

A suggestion, in this case, is that instead of dropping to a liability-only policy, keep your collision and comprehensive and shop for cheaper insurance. You can't predict if you’re going to have an accident. But, you can shop around for affordable rates you can lock-in.

You Have a New Primary Vehicle for Your Commute

Some people have three or four cars between them and their spouse. Let's say you have a vehicle that you only have liability coverage on. If you start driving that vehicle again for your daily commute, you might want to increase the coverage on it. Consider changing it back to include comprehensive and collision. That way if you're in an accident, you'll have adequate coverage for any damages, injuries sustained and property damage.

Other Ways to Save on Insurance

If you auto-renew your policy every year, you might find that you're missing out on insurance discounts. Maybe you haven't been in any accidents for several years. Or, you've taken a driving class.

Here are a few discounts you can ask your insurer about - and if they don't offer these particular discounts, check online with another insurer.

Insurance discounts:

  • A student that lives away from home
  • An antitheft device
  • An energy-efficient vehicle
  • Being a valued customer over a long time frame
  • Bundled insurance (combining home and auto with the same insurance company)
  • A defensive driving class or driver's education course for new drivers
  • Having a multi-vehicle policy
  • Having no car accidents or violations in three years
  • Maintaining a good credit report (some insurers deem drivers as more responsible)
  • Maintaining good grades (for students)
  • Maintaining lower annual kilometres
  • Raising a deductible
  • Telematics
  • Winter tires

Search for the Best Auto Insurance Rates

Your vehicle's age, its value, and your commute are factors to consider when lowering auto insurance coverage. With car collections, vehicles you don’t drive daily, and older vehicles, you might want liability-only coverage. But, if you’ve recently paid off your vehicle, it might be better to shop for discounted coverage as you can’t predict if an accident or damage will occur. Likewise, if you take a new or teen driver off your policy, this might lower your premiums. Lastly, comparison shop for insurance rates.

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