Still think a red car will cost more to insure than a blue one? Suspect you’re paying more than you should for your policy? Separating fact from fiction can help you save – and set your mind at ease.
Vital statistics
It’s a numbers game: drivers under the age of 25 and over 85 have a greater probability of collisions and traffic violations, and their higher insurance rates reflect that. Female drivers under age 25 have better driving records on average than their male counterparts and may qualify for better rates. (For instance, in 2010, there were 1,971 men aged 20 to 24 involved in casualty collisions in Alberta, but only 1,250 women in the same age bracket.) Under-25 married drivers of both (blank) usually net better rates than their single male counterparts for similar reasons. Hear that, guys?
After age 25, as a driver’s experience increases, rates tend to go down. But there’s hope for new drivers: completing an Alberta Transportation-licensed driver-training program, such as AMA Driver Education, can earn them a certificate that gives them experience credit toward a better rate category.
“If you’re teaching your kids to drive yourself, you’re actually missing out on an opportunity for some savings,” says Bob Hillman, AMA Insurance vice-president of finance.
Location, location
If you call Calgary home, you’ll pay more for insurance than you would if you lived in Black Diamond – for the same vehicle. Why? In the city, you’re statistically more likely to get in a collision because of higher population and traffic density. More risk means paying more. “On the liability side, there are way more claims in urban areas, though in the rural areas, you usually pay a little bit more for comprehensive insurance, because you get collisions with animals,” says Hillman.
Make, model and year
Quick, what costs more to insure: a red, souped-up two-door or a grey, four-door sedan? Many people would point to the bright-and-sporty two-door because it’s more likely to be driven fast and furious.
But colour and number of doors don’t figure into the equation. Make, model and year are factors, though. And the hierarchy may surprise you. For example: based on AMA’s rate index, the cost of comprehensive insurance on a 2010 Honda Civic Si is more than double that of a 2010 Nissan Sentra 2.0, a vehicle of comparable size and value. This is because Honda Civic models hold three of the top 10 spots on the Insurance Bureau of Canada’s list of most stolen vehicles in Alberta (among models manufactured between 1998 and 2010 – see IBC). Number one on this dubious-honour roll? The 2006 Ford F-350. Second place goes to the 1990 Dodge Neon. (blank) sports cars don’t even crack the top 10.
Vehicles that are expensive to repair or replace also command higher premiums, so ask your insurance agent for rate quotes before you go car shopping. Safety features such as anti-lock brakes could also save you money if those features have been shown to reduce claims on your particular vehicle.
On the record
Every at-fault liability claim you incur will raise you five notches on the province’s auto insurance-premium grid, which could translate to a five per cent premium increase or more. Repeated traffic safety violations such as speeding tickets – or even a single impaired- driving charge – can jack your rates up even further. If your driving history isn’t perfect, don’t despair. Every year of claim-free driving may drop your rate by five per cent.
Mandatory coverage
If you own a motor vehicle in Alberta, you’re legally required to have third-party liability and accident benefits. Third-party liability covers the other guy when you’re at fault for a collision. Coverage of $200,000 is the bare minimum, but Hillman recommends $2 million. “It doesn’t raise your premium that much – it might only be an extra $7 a month in some cases – but it gives you a big increase in protection,” he says. Accident benefits cover non-vehicle-related costs resulting from a collision (regardless of fault), such as medical care, rehabilitation and funeral costs. The Alberta Insurance Rate Board sets the premiums for these mandatory forms of coverage (see Alberta Insurance Rate Board.).
Optional coverage
Collision and comprehensive insurance are optional, and you can adjust your policy to suit your needs. Collision reimburses you (right away) for damages to your vehicle in a collision or rollover, regardless of who’s at fault. Comprehensive covers vehicle damage from causes other than collisions and rollovers – such as hail, fire and theft. While it can make sense to drop or reduce collision on older vehicles, remember: even if you’re not at fault in a crash, you won’t receive immediate coverage for repairs without collision insurance.
Add-ons and deletions
Increasing your policy’s deductible (the amount you agree to pay upfront toward a claim) can decrease your monthly premiums. You can also look into policy add-ons that specify coverage only for certain kinds of damage (say, limited payouts for windshield damage). If you need to insure a second vehicle, or your home, you might qualify for a multi-policy discount. Shop around. Also review your policy when something changes, says Hillman. “Adding a driver, changing vehicles, moving – that’s when you should review the whole policy.”
