Author: Candybox Marketing

Tips for lower auto premiums

Who doesn’t want a lower auto premium? Here are five tips to keep your premiums as low as possible without sacrificing important coverages.

Ask about special discounts

Do you have winter tires on your vehicle? How about a theft prevention device? These details can add up to significant savings. Be sure to ask your broker about any special discounts or programs to maximize your savings

Bundle up!

Many companies offer a multi-policy discount for clients who place their property and auto insurance with the same insurer. This can save you up to 15% off your premium. When getting a quote, be sure to advise your broker of any property policies you have as this can impact your quote.

Shop around

When your renewal lands in your mailbox this year, don’t be afraid to find out what other brokers have to offer. The insurance market is always changing and what was a good price five years ago may not be so hot today. Contact brokers in your area to see what each can offer. You may find a lower price – or peace of mind that the policy you have is the right one for you

Stay collision and conviction-free

This is the most important tip of all. Careful driving habits are the most effective way to keep your premiums down. Companies love to see conviction-free and collision-free drivers, so much so, that many offer conviction free and good driving discounts.

Ask about Driving Record Protection

Obviously, accidents do happen. That’s why we’re here! But did you know that a single collision can affect your auto insurance premium for six years or more?

The Driving Record Protection endorsement is an optional coverage offered by certain companies. It is designed to protect your driving record if you do find yourself in an at-fault collision. This means the good rate you’ve earned over the years is kept intact and you can breathe easy knowing your premium won’t fly through the roof on the next renewal.

Contact your broker today to find out if you’re eligible for this endorsement.

Clarifying the Co-Insurance Clause

The Co-Insurance Clause is a common clause found on property policies that many policyholders aren’t aware of. It’s important because it affects the amount payable in the event of a claim.

The clause states that the policyholder must purchase an insurance limit equal to or greater than a certain percentage of the property’s total value. This percentage typically ranges from 80% to 100% depending on the insurance company and the type of property being insured.

For example, let’s say we have a farmer whose barn’s true value is $500,000. Her policy has a co-insurance clause of 80%. This means she is required to insure her barn for at least 80% of its true value. Since the barn’s true value is $500,000, the minimum required limit of insurance is $400,000.

If a policyholder insures their property for less than the specified co-insurance percentage, they will face a financial penalty in the event of a loss.

Continuing with our farmer, let’s say she has only purchased an insurance limit of $250,000 for her barn, despite the minimum requirement of $400,000. To make matters worse, a small fire has now broken out and damaged the barn. The loss amount is $200,000.

To determine how much the company will payout on a loss, the following formula is used:

Limit Purchased x Loss Amount = Amount Payable
Limit Required

If we take the farmers information and plug it into our formula:

($ 250,000) x $ 200,000 = $ 125,000
($ 400,000)

This means the insurance company will pay $125,000 of the $200,000 loss, and our farmer is responsible for the additional $75,000. Had our farmer purchased a minimum of $400,000 insurance for her barn, the company would have paid out the full $200,000 to cover the loss.

All policyholders should review their policy to determine what co-insurance percentage is stated and whether their property is being insured to its true value. Don’t wait until you’ve had a loss to find out you’re not properly insured. Call your broker today.

How are auto insurance premiums calculated?

A common question we get from our clients is: how is my insurance premium calculated?

Insurers use a variety of information to determine what premium you pay for car insurance, but we can break it down into four general criteria:

Your vehicle
Driver information
Where you live
Your coverages

The Vehicle You Drive

The year, make, model and safety features of your vehicle all help determine the premium you pay because different vehicles represent different levels exposure. For example, a four door sedan is less likely to be stolen than a two door sedan. Also, vehicles with additional features such as anti-lock brakes are less likely to be involved in an accident than vehicles without anti-lock brakes.

Driver Information

Your age, gender, driver’s license level and driver history all matter because insurers use statistical data to determine the likely hood of an accident. Drivers are grouped based on same characteristics such as age, gender and driving record history. For example, a driver who has been driving for 10+ years with no accidents is statistically less likely to have a collision than a brand new driver holding only a G2 license.

Where You Live

If you’re in a densely populated area like Toronto, theft and collisions are much more likely to occur. This means potentially higher premiums for city dwellers versus those that live in the countryside.

Your Level of Coverage

Aside from the mandatory coverages such as basic accident benefits and third party liability, there are also a variety of optional coverages you can purchase to protect both you and your vehicle. These include the new increased optional accident benefits coverages as well as physical damage coverages for your car such as collision, comprehensive, specified perils, and all perils.

While some of these factors may be beyond your control, careful driving and staying collision and conviction-free are sure fire ways to keep your premium low.