Can you negotiate your auto insurance rates?

Negotiating the price you pay for auto insurance isn’t as easy as scoring a better deal on your cell phone or internet bill. If you call your auto insurance provider, they’ll likely tell you there just isn’t any wiggle room on your premiums, unless you increase your deductible or make another adjustment to your coverage. 

“There is not a lot of opportunity for consumers to negotiate on rates for auto insurance,” says Pete Karageorgos, director of consumer and industry relations at the Insurance Bureau of Canada. “There may be discounts, but some individuals at [insurance] companies do a better job of asking the questions to see if you qualify ahead of time, rather than you having to push for it.”

One reason insurance companies have such limited flexibility when it comes to offering discounts is because standard policy coverages are prescribed by provincial governments. So it doesn’t really matter which company you go with; each will provide the same basic package.

That said, there are other ways you can secure a lower car insurance rate.

See what coverage is optional versus mandatory

In the world of auto insurance, some forms of coverage are mandatory and some are optional. Sometimes, by removing certain coverages, you could save money on your premiums.

For example, drivers are obligated to have liability coverage, which protects you in the event that you injure someone else or their property and they decide to sue you. Accident benefits coverage is also required, and kicks in if you or a passenger in your vehicle is injured. Similarly, Direct Compensation Physical Damage (DCPD) provides compensation for your damaged vehicle if someone else is at fault for the accident. Additional coverage can be purchased, which will increase your cost of insurance. But if you’re looking for savings, you can remove certain coverages.

Take collision coverage, for instance, which is an optional form of insurance if you own your vehicle and don’t finance or lease it. Some drivers with older vehicles will forgo this form of insurance completely, if their vehicle isn’t worth much anymore and they’re willing to take the loss if it’s damaged in a collision.

Comprehensive insurance is an optional form of protection that helps pay for replacement or repairs when your vehicle gets damaged by something other than a collision, such as theft, falling or flying objects, vandalism or fire. Keep in mind that if you don’t carry comprehensive coverage, you will have to pay for this damage out of pocket.

Compare rates across companies

When companies set their premiums, they focus on the experiences of their own customers in particular areas, such as a driver’s age, experience or accident history.

“Insurance companies look at prior years’ data to set the premiums going forward,“ says Karageorgos.

Assuming they saw a certain number of claims in a specific area last year, they anticipate seeing a similar number next year. One insurance company might have had fewer claims from middle-aged drivers who’ve been in one accident than another company has, which could mean they offer different rates to drivers in that category.

“There is some flexibility based on what an insurance company’s experience has been,” explains Karageorgos. “Although the product is mandated and set by the government, you will still find differentiation in pricing among different insurance companies.”

That’s partly because while some high-level data may be shared across the industry, insurance companies largely rely on their own data when determining rates, for no other reason than they simply trust their own data the most.

Telematics is one of those methods that people can truly get a variable discount on their auto insurance

“They will typically go back a couple years to see what the trends are, so they set their prices not looking forward, but looking backward,” Karageorgos says. “That’s why insurance companies hire people like actuaries, and use systems and computer models to determine what those rates should be going forward.” Of course, they then have to get approval for the rates they plan to charge from provincial regulators.

Another measure that could save you some money is by using a broker instead of going directly to the insurance company to purchase a policy. A broker represents many different companies, so if you use a broker and your rates have gone up, when it’s time to renew your auto insurance, ask them to shop around for a better deal for you. Of course, you can also shop around yourself by using a rate comparison website.

One of the big benefits of having an insurance broker or agent — someone you trust your insurance with — is the ability to bounce ideas off them. When you’re shopping around for a car, ask them what the price of insurance is for various vehicles.

Ask about discounts

When consumers are looking for a discount on their auto insurance, insurance companies will typically offer them another line of insurance (home, life or property) as part of a bundle, which can result in a discount. 

If you’re not in the market for multiple forms of insurance, consider whether you’ve made any changes to your driving behaviour since your last renewal. Are you working from home now, going back to school, or using public transit more often? If you’re driving less than you were when you first signed up for your policy, you could be eligible for a lower rate.Many companies offer a student discount or one for retirees over the age of 65, but it’s not always automatic, so you have to ask.

Agreeing to use telematics, also known as usage-based insurance, is also a great way to secure a discounted rate. This will require you to use an app or plug-in into their vehicle to track your mileage and driving habits.

Allstate Canada, TD Insurance, The Co-operators Group Ltd. and Desjardins General Insurance Group are just some of many insurance providers in Canada that offer telematics programs.

“Telematics is one of those methods that people can truly get a variable discount on their auto insurance,” says Karageorgos.

“If you think you are a safe driver and others in your household are, using that type of technology can produce significant discounts… but the best way to get the best rates is to be the best driver.”