How to get cheap car insurance

Real Money Talk - A fresh take on personal finance

Not all car insurance is the same — car insurance quotes will vary by company, driver, car, and city.

You need to research your situation to make sure you have the right coverage for yourself. We put together a list of how to get cheap car insurance now and in the future, whether you’re mid-policy or shopping around for new quotes this year.

What is the average price of car insurance in Canada?

1. BC - $1,832
2. Ontario - $1,528
3. Alberta - $1,316
4. Saskatchewan - $1,235
5. Newfoundland - $1,168
6. Manitoba - $1,140
7. Nova Scotia - $$891
8. New Brunswick - $867
9. Prince Edward Island - $816
10. Quebec - $717

*Source: Insurance Bureau of Canada

Why do we care about the average?

Public car insurance, where the government provides insurance, is in BC, Saskatchewan, and Manitoba. Note these provinces sit among the most expensive in the country. On the other hand, auto insurance in Quebec is the cheapest because it's a hybrid model – you buy your accident benefits (the health insurance portion, and most expensive part, of any car insurance policy) from the government. But you buy everything else from private insurers.

For the rest of the provinces, you buy your car insurance privately from whoever will give you really cheap car insurance. So, if you're asking where to get cheap car insurance, move to Quebec or Atlantic Canada. Still, even a postal code change within your city can reflect price changes due to many factors beyond your control, like theft, density, and proximity to the nearest collision-riddled intersection.

Also, we just want to show you the average, so you know whether you're getting cheap insurance or paying too much.

With that, on to how to find cheap car insurance.

1. Choose the right car to keep your insurance costs down

If you want cheap car insurance, you should keep insurance costs in mind when you’re thinking about buying a car and even do some insurance price research before driving that car off the lot.

Insurers consider a range of statistics when assessing how much to charge for coverage for any driver and car combination.

For instance, car models frequently targeted by thieves may cost you extra to insure, as will rarer cars and fancy sports cars. However, a minivan is often one way to get super cheap insurance because of its association with families carrying precious cargo.

You can use the Insurance Bureau of Canada’s CLEAR table to discover which vehicles have low claims against them, translating to lower auto insurance rates. However, if you're not an Excel wizard, you can just compare car insurance prices by entering your postal code above.

2. Adjust your policy to reflect your needs

Different drivers have different insurance needs, so find an insurance plan that caters specifically to you.

There are four mandatory coverages, pretty well across Canada:

• Third-party liability - if you damage someone else’s property or injure them
• accident benefits - if you’re hurt following an accident
• uninsured auto - if an uninsured motorist hits you
• Direct compensation property damage (in most provinces) - so you only ever deal with your insurer regardless of fault. Your insurance company receives compensation from the other insurer.

The minimum third-party liability (TPL) is $200,000 but is generally set at a default of $1 million. If you want really cheap car insurance, get the minimum. However, we do not recommend it. Many TPL claims go easily over $1 million, and you'll be paying that difference out of pocket.

Accident benefits pays for your recovery after an accident for physiotherapy and medical expenses. It also pays for loss of income and funeral expenses. You can upgrade this portion to receive more income replacement (it's not much, depending on the province). Still, suppose you have quality health benefits at work (including long-term and short-term disability) and life insurance. In that case, you can reduce this to the minimum coverage.

3. Drop the optional coverages if you no longer need them

If you have an old car, consider forgoing collision coverage. Many drivers skip collision coverage if their old car is not worth repairing because it doesn't hold much value. Think of it this way, if you have to pay a $1,000 deductible to repair a car, that's only worth $500, you can drop collision. Put the savings into a new car fund.

You can also forgo comprehensive coverage to get cheap car insurance. Comprehensive protects your car when it's not driving – bad weather floods your vehicle, or a tree falls on top of it, for instance.

4. Track your driving

Consider usage-based insurance (UBI), especially if you're a student or a young driver. Young males typically pay much more than the average for car insurance due to stereotyping from insurance companies.

UBI itracks kilometres driven and other stats like how aggressively you brake and accelerate, speeding, and how you handle turns. With this system — which you can monitor yourself on your phone — you can earn discounts for driving well.

Many auto insurance companies like Intact, CAA, or Onlia offer UBI, either in-app form or a device installed in your engine, to monitor your performance outside generic statistics.

5. Shop around and get quotes

When shopping for car insurance, do not take anyone's word that they're the best deal for you — you need to find that out for yourself. Do your research. Don't assume the most prominent company is the best, just because they spend the most money on advertising to tell you they're the best. You may not have heard of some great insurance companies.

You can use our car insurance quoter to analyze what different insurers will charge you. Or consider also doing it the old-fashioned way and visit an insurance broker to help you find the best fit for you.

Make it an annual tradition because companies change pricing all the time.

6. Keep a good driving record

Collisions (that are your fault) and driving convictions make your insurance rates go way up – and they stay on your insurance record for years. Drive safely, drive sensibly, and obey the road rules (don’t speed, don’t text and drive, don’t drink and drive, etc.).

Drivers with the best records over long periods pay the lowest rates.

7. Ask about ways to get discounts on car insurance

If you’re still wondering how to save money on car insurance, call your insurance provider or broker. Many insurers may be able to offer discounts.

Are you a member of any professional organizations or affiliation groups (e.g. union or alumni), ask if they have discount relationships with any insurers.

8. The bundling effect on your policies

You may get discounts if you bundle insurance plans together, for example, by having your auto and home insurance with the same carrier. If you drive multiple cars, you can get a multi-line discount by insuring them all with the same company.

9. Make your payments on time, all the time

Don’t miss a payment. For one, it can lead to NSF fees and overdraft charges. Your insurer now has to chase you down for payment, which can increase your rates in the future.

A missed payment can hurt your credit score, too.

10. Install winter tires

Quebec requires winter tires or face penalties and fines. For the rest of car insurance in Canada, you can get a 3-5% discount by installing winter tires. That level of discount won't pay off your winter tires, but at least you'll stop in time in the snow and avoid the skiing down the road helping to avoid expensive claims, thus saving you money.

11. Pay premiums annually, not monthly

If you pay your premiums up front for the year or half-year, you may get a small cut of the savings from administrative fees.

12. Consider increasing your deductible

The deductible is the initial amount you pay on any claim before the insurance company will jump in and pay the rest. Increasing your deductibles can be a way to lower your premiums. But that also means you're paying more cash as a deductible payment if or when you crash your car.

13. Take an accredited driving course

Especially useful for new drivers, an accredited driving course will make you a better and safer driver while also resulting in a discount from many insurance companies.

14. Install anti-theft devices

Many new cars have immobilizers installed already. But any anti-theft device for a car, from steering wheel locking devices to GPS tracking devices (e.g. Lojack), may earn you a car insurance discount. If not, it prevents a comprehensive car insurance claim for theft which could raise your rates.

15. Don’t use your car

I know, it sounds ridiculous. But, know this, in COVID, when everyone was working from home, many Canadians called their insurance company to say, “Hey, I’m driving less,” and as a result, saw a discount. The less you’re on the road – walking, cycling, or taking transit to work – the more money in your pocket.

The Bottom Line

If you want cheap car insurance, follow the steps above. They are easy to do and may result in immediate savings. You can also move since location is a factor – Brampton car insurance costs more than car insurance in Toronto – but that’s harder to achieve. If you’re 25 & under, you’ll pay more, but that’s hard to change. Finally, you can swap your car out for one that’s cheaper on car insurance, but that may be cost-prohibitive.