Saving Money When Dealing Wih Insurance

Every year, many of us spend hundreds, if not thousands, of dollars on insurance. That's not small change! This new weekly feature is designed to help you save money on your auto insurance without compromising your coverage.

Travelling with your laptop? You likely need special coverage

Attention home-office workers: If you travel with any of your business equipment, you should have a separate business policy (or a business extension on your existing homeowners/tenants policy), because business equipment is covered under your homeowners policy only while it is in your home, and then only to the limit specified. Therefore, if you are in the habit of bringing your state-of-the-art notebook to client meetings, for example, make sure it is adequately protected.

Whatever your home business, discuss it with your insurance provider. The coverage you need may vary depending on the nature of your business. (top)

Driving in the U.S.? Carry enough liability insurance!

Although your insurance covers you if you are driving your car anywhere in the United States (but not Mexico), make sure you're carrying enough liability insurance. If you were to cause an accident in the U.S. and have a lawsuit filed against you, any damages would be payable in U.S. dollars -- and payouts for personal-injury lawsuits can be hefty in some states.

So if you're planning a driving trip to the U.S., ask your insurance representative what liability limit he/she would recommend. Better to pay a little more to boost your limit than be hit with a big payout that your insurance doesn't fully cover. (top)

Try to control automobile Comprehensive claims

Claims made under your automobile Comprehensive insurance (which covers damage caused by falling or flying objects, flood, earthquake, fire, theft, vandalism, and collision with animals) are not considered at-fault accidents, and therefore, your rates shouldn't go up because of these kinds of claims.

HOWEVER, although insurers in certain provinces cannot raise your rates or cancel your automobile policy because of Comprehensive claims, they can raise the deductible on your Comprehensive coverage, or even delete that coverage altogether if the company thinks you have had more than your share of these kinds of claims. In other provinces, they might even refuse to renew your entire auto policy as a result of frequent Comprehensive claims.

Although Comprehensive losses are not your fault, insurers believe that these kinds of claims can, to a certain extent, be controlled. By taking a hard line, they figure they can prod you into taking the necessary precautions to prevent some of these claims from recurring (a car that is broken into repeatedly for its stereo equipment, for example).

Therefore, you may want to consider paying for smaller losses yourself, instead of claiming under your Comprehensive coverage. Keep in mind that it's the frequency of claims, and not their total value, that counts most in the eyes of insurers � you're better off making one $10,000 claim than three $1,000 claims.

So don't think you have carte blanche with Comprehensive claims. Even though, in most cases, Comprehensive claims are beyond your control, they still go on your insurance record. So do your best to limit these kinds of claims, and you will save money in the long run. (top)

Slow down, save money

Most insurance companies will forgive one minor moving violation, like a speeding ticket (less than 30 km/h over the limit) or seatbelt ticket, but they are unlikely to overlook two in a three-year period. Therefore, if you want to stay at the highest rating level, and pay the least for your insurance, you not only have to be free of at-fault accidents, but you also can't have more than one moving violation in a three-year period. Otherwise, you drop to a lower classification and pay anywhere from five to 20 per cent more for your insurance. A third conviction in three years could mean an increase in your insurance premium of at least 25 per cent. It might even oust you from the regular insurance market and force you into the so-called "high-risk" market, where you could pay as much as 250 per cent more for your insurance.

A moving violation stays on your Motor Vehicle Record (MVR) for two years. However, if you are applying for insurance at another company, you will likely be asked whether you have had any tickets in the last three years. If you have, you might want to stick with your current insurer at least until that period has elapsed. (top)

Save on premium with anti-theft devices

If you have an anti-theft device, like an alarm, in your car, that should be taken into account when the insurer calculates your premium. While there are many other factors that dictate how much you pay for your insurance, loss-prevention equipment and other safety features will be looked upon favorably by insurers.

Savings may be in the range of $30, depending on the location of the vehicle, the type of vehicle, and the type of theft-deterrent device -- alarm, steering-wheel locking bars, engine cut-off system, or electronic immobilization (Electronic immobilization, generally considered the most effective, means your ignition key is electronically coded, so the vehicle will not start without your key.) (top)

Keep your insurer posted on changes in your driving circumstances

Be sure to inform your insurance provider of any changes in your driving circumstances that would improve your risk profile and reduce your premium accordingly -- for example, if you move to a less populated area; if you change jobs and commute fewer miles to work; if you buy a new car that may have a better insurance rating; if you start a home business and no longer drive to work; if you reduce the number of drivers in your household; and so on.

Of course, you should update your insurance representative on ANY changes in your circumstances -- not just those that you think might lower your premium -- in order to ensure that your risk has been properly assessed and that you have the appropriate coverage. As usual, when it comes to insurance, better safe than sorry! (top)

You cancel prematurely, you pay the penalty

If you have found cheaper home or tenants' insurance elsewhere and want to cancel your existing policy, don't be too hasty!

While your insurance policy states that you can terminate your coverage at any time on request, you will likely be charged a penalty (called "short-rating") for cancelling before the renewal date.

The amount of the penalty will vary depending on how many months are left on your policy when you cancel it. The more months remaining, the higher the penalty. If, for example, your policy had been in force for just two months, you would be charged considerably more than one-sixth of the annual premium. So it could even end up costing you more than what you would save by switching insurers.

As soon as you have agreed that a company will insure you � even if this agreement is only verbal and even if you haven't yet paid a cent � that commitment stands. Similarly, the insurer has made the same commitment to you. It is obligated to insure you from the time of that agreement, even if it hasn't yet received any money from you. So it works both ways.

If you decide to cancel come your renewal date, be sure to inform your insurer in writing. It's not enough to simply ignore your renewal notice. By sending you the renewal notice, the insurer has already made a commitment to you, so you, too, are on the hook for that coverage unless you tell the company that you will be cancelling it as of your renewal date. (top)

Renting a car? A "27 endorsement" can save insurance costs

If you're renting a car in Canada or the U.S., your existing insurance will likely protect you against injuries you might cause to others, and other property that you might damage with the rental car (make sure you are carrying enough liability coverage), as well as provide accident benefits if you are injured. However, it doesn't cover damage to the rental car itself, so that's why you need additional insurance.

However, there is a cheaper way to insure your rental car than forking out the daily amount that car-rental agencies charge for what they call "collision damage waiver." You can ask your insurance provider to add a "27 endorsement," or "rental vehicle insurance" (it may have different names depending on the province) to your car insurance policy. This provides you with coverage for damage to non-owned automobiles, like a rental car, in Canada and the U.S. (ask your insurance provider or travel agent about coverage if you are driving internationally), for both the person signing the rental agreement and his or her spouse. The rental agreement must be in the name of the insured person named on the auto policy. So if two friends are sharing the same rental car, they each need to add this endorsement to their own auto policies. Relatively inexpensive, the endorsement pays for itself within a couple of days of renting a car.

But there is a potential downside: if you did have an at-fault accident with the rental car, it would count against your driving record, since your insurance company would pay the claim. With the rental agency's insurance, on the other hand, you can simply get the car replaced and carry on without a lot of fuss and bother. The choice is yours. (top)

Car insurance: Consider raising your deductible to lower your premium

On most � but not all � auto insurance claims, you have to pay a deductible � that's the amount of the claim that you must pay before your insurance kicks in. In other words, if your claim is for $2,000 and your deductible is $500, you would pay $500 and the insurance company would pay $1,500. Deductibles may range from as low as $100 to more than $2,000, depending on the type of coverage you have and the province in which you live.

Most companies have a minimum deductible, but you can choose a higher one in order to save money on your premium. The higher the deductible, the lower your premium. This could make a significant difference in the case of a young male driver, for example, who is charged a high rate for Collision coverage.

In choosing a deductible, make sure you select an amount that you could afford to pay out of pocket if you were involved in an accident tomorrow. If you wouldn't be comfortable shelling out $1,000 or even $500, choose a lower amount, even though you will end up paying a higher premium.

Do the math. Ask your insurance provider what the difference in premium would be with a higher deductible versus a lower one, and make your decision accordingly.

Depending on the regulations in your province, you may be able to recover all or part of your deductible for Collision coverage, IF you were not at fault or only partially at fault in an accident. Safer is always cheaper! (top)

Buying a brand new car? Consider a "waiver of depreciation"

If you're buying a brand new car, ask your insurance provider about getting an endorsement (add on) on your policy that limits depreciation charges if your car were to be totalled in an accident or stolen. This endorsement has several names � "waiver of depreciation," "limited depreciation policy," "removing depreciation deduction" � depending on the province in which you live. It says the insurance company will not charge depreciation within a specified time period (usually 24-36 months, depending on the province) if your car is damaged beyond repair in an accident or stolen.

Without this feature, you would receive only actual cash value (replacement cost LESS depreciation) for your car. The difference could mean thousands of dollars.

You can request this endorsement when you are insuring a new car that you have just bought from a dealer. The cost is minimal, and it's well worth it should you ever have to call on it. Remember, for the endorsement to kick in, your car must be deemed a total loss by the insurer. No fender-benders! (top)

Shopping for a car? Check its claims experience before you buy.

If you're in the market for a new car, choose one whose claims experience is good. Most insurers now use the CLEAR (Canadian Loss Experience Automobile Rating) system of rating vehicles for insurance purposes. That means they take into account a vehicle model's claims experience (along with other so-called "risk factors" like your driving record, where you live, how far you drive, how often you drive, and your age) when they calculate your premium, rather than using the manufacturer's suggested list price, as was done in the past.

In other words, vehicle models that cost more to repair, have fewer safety features, or are stolen more often cost more to insure.

You can check the claims rating for each vehicle model in the free brochures "Choosing Your Vehicle" and "How Cars Measure Up," both published by the Vehicle Information Centre of Canada (VICC), a division of the Insurance Bureau of Canada that compiles claims information.

"Choosing Your Vehicle" outlines the availability of safety and theft- deterrent devices on the latest model-year vehicles, and offers comparative insurance rankings for all models of cars for the past five model years; "How Cars Measure Up" shows the insurance claims experience of the most popular new Canadian models of private passenger vehicles for the latest model-year available (usually about two years behind the current model-year).

To obtain a copy of these brochures, contact VICC at:

240 Duncan Mill Road, Suite 700, Don Mills, ON, M3B 1Z4
Telephone: (416) 445-1883;
(For "Choosing Your Vehicle," call the Insurance Information Centre of Canada at 416-445-5912, toll-free 1-800-761-6703)
Fax: (416) 445-2183; E-mail: VICC(at)vicc.com Web site: www.vicc.com

Or ask your insurance representative how the model you are considering ranks in the claims department. (top)