Sherman, our motorhome, shivering in the snow. Photo taken October 27, 2016.
Where are Kevin and Ruth right now? Osgoode, Ontario, Canada. Just south of Ottawa.

And where are they going next? We leave November 1st for a six week trip to Romania and Moldova.

Thursday, September 27, 2012

Want to save on car insurance?

It's actually pretty easy and most people could pocket at least a couple of hundred dollars a year by making a few simple phone calls.

We have a little car in storage back in Ottawa, and we're going to be driving it down to Mexico later next month. While in storage, we have only comprehensive (fire and theft) insurance on it, at a cost of around $60 for the year. So in order to drive it, we needed to put regular insurance back on it.

Our car is a 2006 Pontiac Wave 5. It's the exact same car as a Chevy Aveo, but with Pontiac nameplates. It has 160k kms (100k miles) on it and it's probably worth around $4,000 at the most.

So yesterday I emailed our insurance broker. I asked her how much to put the car back on the road. She gets back to me with a figure of $850 for the year.

Of course I had already shopped around and knew that I could get it for under $700, so I told her to cancel the policy and I told her why. Sorry, but for almost $200 in my pocket, I see no reason why I should have any loyalty to them at all, and she couldn't give me a reason to stay with them. It's not actually $200. I'm going to cancel the Ontario insurance after the first month because we'll have Mexican insurance on it after that. But it's the point of it.

Now, those prices we were quoted were for the absolute bare minimum of coverage required by law. I know that will be different for each state or province, but in Ontario you have to have liability coverage and accident benefits and bodily injury coverage.

It does not make any sense for us to have collision coverage on the little car. If we have a accident that's our fault, we would just absorb the cost of damage to our car ourselves.

Now, we all know that insurance of any kind is simply gambling. You are placing a bet (your premium) that something bad might happen to you and if it does, you win. If it doesn't, you lose. And you know what the odds are? The odds are that you will lose. And the insurance companies know that, so they have made insurance and it's premiums as complicated as possible to make sure that it's as easy as possible for you to place higher bets (have higher premiums).

So, how can you save money? Well the first thing is to shop around. (However I realize this is not possible in provinces or states that have government run insurance). I shopped with 8 different companies and the prices ranged from $655 to $2,000. How can that be? I have no idea, because I was very specific in making sure I was comparing apples to apples. But it's obviously a wide variance and it certainly says something about how worthwhile it could be to shop around.

But the next thing is to review your policy and see where you can save. Here's things you can consider that will reduce your premium...

Raise your deductibles! This is probably the number one thing that will easily save you a few dollars. If your collision deductible is under $500, you're not even going to make a claim unless the damage is well over $2,500. Between your deductible and the amount your premium will increase due to the claim, it only makes sense to have a high deductible.

Get rid of collision coverage all together! This is only possible if you own your car outright. If you have a bank loan or financing on the car, your lender will likely require that you have collision coverage on it. But, you can still make the deductible as high as possible.

Reduce your liability coverage! Some brokers are now advising $5M liability coverage, and $2M has become the standard. But you can still ask for $1M coverage, or even less. (Again, some of these figures may differ for different areas).

Institute a deductible! Not sure how this works in other places, but in Ontario you can institute a deductible for a claim on your car for an accident that's not your fault. Sound complicated? Yep, that's to get more money out of you! With Ontario no-fault insurance, your own insurer pays for your repairs even if the accident wasn't your fault. You can institute a $300 deductible for this Direct Compensation - Property Damage coverage and that will reduce your premium. This means that if someone else hits you, you will be responsible for the first $300 of repairs to your vehicle. Instituting this deductible will reduce your premium.

So, take a few minutes and make some phone calls. It'll be the easiest money you'll make today! Tell us how much you saved!


  1. Can't play along today. Maybe in a few months. Haven't had a pink slip in my possession since we parted company with the RV in May of 2010 (*sad*)
    It's an odd thing to not *own* a vehicle, as I/we have always had one or more since about 1977.
    Seems vehicle ownership is part of our North American culture. The ex-pat gig means the company ponies up the dough for all things automotive. I find that to be the very best way to save on insurance too. *snort*

  2. Hi Kevin, our Mex ins says we must have ins in the US to get Mx ins. Who do you go through for MX ins? Hope to see you this year in MX. We will probley be crossing the border abou the 2nd week of nov. Going down the east coast and to Progreso, Yuc. Going to look for a place to park the MH and then can ride the scooter out from there. Have a good trip back to Canada. Bill and Bonnie

    1. Hi Bill and Bonnie! Our motorhome insurance while in Mexico was with ACE Seguros. They were the ones who specifically said that we did not need to have Canadian coverage in place while insured with them in Mexico. I would assume it would be the same with a car.

      Hope to see you as well. Man, can't believe we've only just missed each other the last few winters! We'll probably be about two weeks ahead of you, heading for the mountains south of Guadalajara.

  3. Your right, insurance is gambling. The key is how much you want to risk and how much you want an insurance company to help share the risk. As your examples show, it is easiest to see the equation with collision and comprehensive coverages. The maximum value at risk is your car. (Wouldn't you know it though after i switched to a $1000 comprehensive deductible on my Miata toad, I hit a West Texas hailstorm with softball size hail; I lost that bet).

    Liability coverages are different. In this case, what you are gambling are your other assets. In the States, if I injure a person with my car and cause him 2 million in injury and he is now a paraplegic, and my insurance is only $300K, the other party can come after me for the difference of $1.7 million. Not a big deal if my 1999 22 foot class c motorhome is about the extent of my assets as there is nothing to take. Now, if I own a bunch of Bain Capital Stock, I am more concerned and more interested in having a higher limit.

    This does vary by country based on a number of things. I was at first surprised at the size of the recommendations you got in Canada, but then I remembered up there the "loser pays" the other side's lawyer bil, hence a reason for more cover. But with universal health care, that aspect of the damages should go down I would think. And Mexico is lower because of the low cost of health care and vehicle repair.

    I know I will be dropping my US coverage on the RV when I get to Mexico this year. But I can't find a US company to just sell me storage on the Miata in the US.

    1. Good comments Mike, thanks for your input!

  4. We just went through our insurance, we do it every year when the bill is due, to make sure we aren't paying for something we don't need and that the deductibles are sufficiently high enough. Good job on you car.

  5. We didn't have collision on our truck either to keep costs down. We're not so sure about the van though since it is the only vehicle we have now plus our only home. Great info - thanks.

  6. Get the cheapest car you're comfortable with, then the highest deductible and the minimum liability. I went from $1200/year to $380.
    A guy backed into my car last year and caused $2000 in damage. I pulled the dent out myself and kept the 2 grand. If you drive slowly and carefully, odds are very good you'll never be the one at fault.

    1. I think you definitely have the right idea there CAE.


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