After moving to Canada I was shocked at car insurance rates. I had paid more in insurance costs in six months than my car was worth. While I thought my car insurance was high, I was not alone and certainly not paying as high as a lot of drivers out there. Then came the obvious questions, why are the rates so high and what can I do about it?

There are a number of factors insurance companies take into account when providing a quote. The first and foremost is the age of the driver. The younger you are the higher your insurance rate is likely to be. Young drivers are considered a high risk and the rates reflect that. It does not matter if you have not had any accidents or speeding tickets, if you are 25 years or younger, you are considered high risk. If you are buying your first car consider buying an old car and take the basic insurance policy instead of the more expensive comprehensive policy.

Car insurance rates also factor in where you live. Certain post codes are considered higher risk areas than others. I experienced this first hand. When I moved to a new neighborhood 21kms away, I saw a significant drop in my car insurance rate. Living in a high-density population area among other factors is likely to have an effect on insurance rates.

The type of car you drive has an impact on your car insurance. Certain makes and models are considered higher risk than others. I strongly recommend looking at insurance ratings of a car at Insurance Bureau of Canada next time you are shopping for a car.

Consider increasing your deductible. A deductible is an amount you will pay from your own pocket. Basically, if your deductible is $500 and the claim is $1000, you pay $500 and the insurance company pays the remaining $500. Increasing your deductible will lower your premium.

You can lower your premium even further if you consider third party insurance instead of comprehensive coverage. Another important factor is the speeding ticket. Speeding tickets are just another way of shooting yourself in the foot. Every time you get a speeding ticket your premium increases. Is it worth risking a speeding ticket and increasing your premium?

I have been able to squeeze a little more savings from my premiums by including home insurance. Combining car and home insurance with the same company can be a great way to lower premiums. By combining my home and car insurance I ended up paying lower than I would have with car insurance alone.

There are a lot of insurance companies out there. Don’t be afraid to shop around for the best rates.

Here are some tips to lower your car insurance premium:

  1. Protect your driving record.
  2. Take a driving training course.
  3. Bundle your car and home insurance.
  4. Consider the make and model of a car you purchase.
  5. Maintain a healthy credit rating.
  6. If moving to a new location, check how it will impact your insurance premiums.
  7. Install winter tires. Most insurance companies offer winter tire discounts.
  8. Check if your provider offers discounts for memberships.

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