Lower Insurance Costs

Lower Insurance Costs

Written by Lisa Rennie
Fact-checked by Caitlin Wood
Last Updated September 1, 2021

Certain types of insurance policies are unavoidable. If you’ve got a car, for instance, you need an insurance policy to legally drive it on Canadian roadways. And if you buy a home and have a mortgage on it, your lender will require that a property insurance policy is taken out before they extend a home loan. 

But just because you need insurance doesn’t mean you have to settle for sky-high premiums. There are ways to go about keeping your insurance costs low. Let’s get into what these tactics are.

How To Lower Insurance Costs

No matter what type of insurance policy you’re buying – be it auto, home, or life insurance – there are certain things you can do to help reduce your insurance premiums to keep more money in your pocket, including the following.

Compare Rates 

It’s always best to do a little comparison shopping before you settle on an insurance policy, which is why it’s helpful to compare different rates among different insurance providers. And while you can always call individual insurance companies to find out how much they would charge for a specific type of policy based on your profile, you’ll find it a lot easier to conduct a quick online search.

There are several online insurance brokers available that will provide you insurance quotes on a single platform. All you need to do is input a few pieces of information, and the online broker platform will populate all the available insurance providers and their associated rates. This can help you quickly and easily compare rates and see which policy best meets your needs.

Bundle Your Insurance Policies

If you’re looking to apply for a few insurance policies, consider taking them out with one insurance provider rather than scattering your policies with different insurers. By ‘bundling’ your insurance plans, your insurance provider may offer a discount, which can shave a few dollars off your premiums. Plus, dealing with just one insurer for all of your insurance needs will make things a lot easier and more streamlined for you.

Pay Your Premiums Annually 

Many Canadians choose to pay their premiums every month rather than on a yearly basis. It’s easier to see a much smaller chunk of money withdrawn from your bank account periodically rather than paying a huge bill at the end of the year. 

But insurance providers charge a little more for the convenience of monthly premium payments. If you choose to pay your premiums annually, you may be able to get a bit of a discount and save some money on your premiums.   

Avoid Adding More Coverage Than You Need

You have options when it comes to the type of plan you want. But you should know that the more coverage you choose, the more expensive your policy will be. For instance, a life insurance plan that pays out $1 million in death benefits would cost you more than a plan with a $200,000 death benefit. 

Consider your needs and how much coverage you need with your particular policy, and customize it as much as you can so you are only paying for what you need. 

Increase Your Deductible

Before an auto or property insurance policy kicks in after a claim is made, a deductible will first need to be paid. When it comes to insurance deductibles, the higher it is, the lower your premiums will be. If you believe your risk level is low, consider a higher deductible. This will mean lower premiums every month.

Just keep in mind that if you do have to file a claim at some point, you’ll be paying a much higher deductible. Depending on the scope of the claim made, it may not be worth filing a claim at all if the damage done costs less than your deductible amount.  

Improve Your Credit Score

Your credit score plays a key role in various aspects of your life, including the price of an insurance policy. Your score tells insurance providers the likelihood that you’ll be able to make timely premium payments. A lower score tells insurers that you are more likely to miss payments while a higher score is more indicative of someone who is financially responsible.

So, if your credit score is currently on the low end of the spectrum, take some time to improve it to help reduce your insurance premiums by doing the following:

  • Pay all bills on time
  • Keep credit card expenditures to no more than 30% of your credit limit
  • Keep old credit accounts open
  • Don’t apply for too many loans or credit accounts within a short time period
  • Check your credit report for errors and have them rectified if you catch any

How To Lower Car Insurance Rates

Car insurance rates are among the more expensive types of policies out there, so anything you can do to keep these costs low can really make a big difference to your bank account. When it comes to car insurance policy premiums, here are some tips to keep them on the lower end.

Add Anti-Theft Security 

The more difficult it is for someone to steal your car, the lower the odds that you’ll need to file a stolen vehicle claim. And one of the best deterrents for car theft is a security system in your vehicle. Depending on the insurance provider, the discount offered can be significant. 

Ask your provider what types of security devices or systems they recognize and which ones come with the biggest discounts. For example, a car alarm is a typical system that you may have installed in your vehicle if it doesn’t already have one. 

Look Into Various Car Insurance Discounts

There are several auto insurance discounts available from insurance providers that you want to look into, such as the following:

  • Policy bundles. As mentioned earlier, bundling your policies can help you save. And if there is more than one vehicle in the household, it makes sense to bundle them with one insurance provider to minimize your premiums payouts. 
  • Winter tires. During the colder months of the year, having a set of winter tires on your car will help you drive safer on slick roads. Your insurance provider will appreciate this and will offer a slight discount as a result. 
  • Senior and student discounts. Depending on your age, you may be entitled to an insurance discount. Seniors and students typically qualify for reduced premiums, so if you fall under one of these categories, inquire about any discounts.
  • Driver’s education course. Participating in a driver’s education class means you’ll have better knowledge of the rules of the road and may be able to receive a discount on your auto insurance policy.

Keep A Clean Driving Record 

For insurance companies and the prices they charge, it’s all about risk. If you’re considered a high-risk driver, your premiums will reflect that. As such, do your best to keep a clean driving record. That means avoiding speeding or parking illegally, which can help reduce your premiums by as much as 30%.

Get A Car That Is Cheap to Insure

Hybrids or electric cars emit less CO2, and insurance companies are starting to recognize this and rewarding drivers for such vehicles with premium discounts. Further, other types of vehicles may also qualify for discounts, such as new cars less than 3 years old. 

There are also specific makes and models of vehicles that are cheaper to insure. Right now, for instance, the least expensive cars to cover include the Toyota RAV4, Honda CR-V, Honda Civic, and Hyundai Kona.

How To Lower Home Insurance Rates

Certain premium reduction tactics are specific to home insurance policies, including the following.

Add Security 

Installing an alarm system that’s fully monitored is one of the best ways to keep your home secure and lower your insurance premiums. Again, insurance premiums are all about risk. 

If your home is less at risk of theft, it will be cheaper to insure. And a security system can deter thieves from breaking in and stealing contents or damaging your home, which means the odds of a claim being filed are much lower.

Buy A New Construction Home

Homes that were built less than 10 years ago are less likely to have any significant issues that could increase the chance of damages. Therefore, this increases the likelihood of a claim. Before you buy a home, consider buying new construction to keep your premiums low. 

Protect Your Home Against Damage

Natural disasters like fires and floods can cause significant damage to your home, which means massive payouts from an insurance claim. A home that has certain layers of protection against such issues is much less at risk of damage, which means the insurance company also faces less risk. And in return, your premiums may be discounted.

For instance, you may want to have certain systems and tools installed in your home, such as a water sensor, sump pump alarm, or main line backwater valves. And conducting maintenance on your electrical wiring, plumbing system, HVAC systems, and roof can also help.

How To Lower Life Insurance Rates

Certain factors are unique to life insurance policy premiums. Consider the following tips to reducing the cost of these policies.   

Quit Smoking 

There are certain behaviours that life insurance providers will look at when determining how much to charge you for a policy, and smoking is one of them. Your life expectancy is a key factor involved in the premiums you pay for your life insurance plan, and smoking can significantly shorten your lifespan. 

As such, your premiums will be a lot higher compared to non-smokers. One of the best ways to reduce your premiums is to quit smoking and avoid any other potentially hazardous habits that could cut your lifespan short. 

Choose A Term Insurance Policy

You have options when it comes to how long you want your policy to remain in effect. More specifically, there are term policies and whole life policies available. 

A whole life insurance policy provides lifelong coverage, which means it will remain in effect your entire life, no matter how long you live, as long as you are up-to-date with premium payments and your manner of death is covered under your policy.

A term life insurance policy only remains in effect for a certain amount of time. For instance, you may take out a 10-year or 20-year policy based on your needs. As you would imagine, a term policy is cheaper than a whole life insurance policy simply because the length of coverage is shorter. 

If you’re looking to cut costs on a life insurance plan, consider a term policy if it can provide you with the type of coverage you need during the years when the bills are usually at their highest.   

Get A Joint Policy

If you’re married and both you and your spouse want life insurance coverage, consider taking out a joint policy, which is cheaper than having two separate plans.

Live A Healthy Lifestyle

The healthier you are, the less likely you will be to get sick and potentially pass away prematurely. Again, it’s all about risk with insurance companies, and they’re willing to extend lower premiums to those who are more likely to live a longer life with few medical issues. 

Don’t Renew; Requalify Instead

If you take out a term life insurance policy, you may want to extend your coverage after the initial term ends. But rather than renew your policy, consider requalifying for a brand new policy instead, which may afford you with lower rates. 

Final Thoughts

Insurance premiums are just another bill to add to the pile, but there are ways to keep these payments to a minimum. Regardless of whether you’re applying for a life, property, or auto insurance policy, there are things you can do to reduce your premiums and keep more money in your pockets. 

Rating of 5/5 based on 2 votes.

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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