Auto insurance: to better understand and save

Car insurance premiums in Quebec can vary from one insurer to another. Why?

Autorité des marchés financiers (AMF) is the body that monitors car insurance rate compliance in Quebec. Authorized insurers may set their own rates, but they have to be transparent with the AMF as to the rules they use to classify risks and the premiums applied to each classification. Premiums can vary widely from one company to the next as a result. However, there are a number of specific factors that determine the price you’ll pay, and it’s always a good idea to shop around before making a final decision.

How are car insurance premiums calculated?

The premium you pay is based on a number of variables:

• The vehicle (type, make, model, year, popularity among thieves, safety rating, cost of repairs, anti-theft equipment, part marking, etc.)
• What you use your vehicle for (e.g., personal or commercial use)
• Your sociodemographic data (where you live and where you drive; your age, gender, profession, level of education, etc.)
• The coverage and deductible options you choose
• Your driving record (years behind the wheel, vehicle use, demerit points, driving behaviour, how many kilometres you drive a year)
• Your credit history
• Any automobile accidents you’ve had, whether or not you were at fault

  Note: Honesty is definitely the best policy here, because insurers have access to your claims history in the Fichier central des sinistres automobiles (FCSA) so they can easily find out if you’re trying to hide something.

Why are premiums on the rise?

Two of the main reasons auto insurance premiums are higher today are that property damage costs have skyrocketed and there are more distracted driving accidents these days. Bumpers that once cost $1,000 to replace are much more expensive today because now they’re equipped with all kinds of sensors and electronics. We’re also surrounded by smartphones, tablets, electronic dashboards, GPSs, and other cool gadgets vying for our attention, which means a lot of accidents are caused by distracted driving.

Making shopping for car insurance as painless as possible

When it comes to car insurance, do your homework and shop around to get the best price. The market is flooded with insurers and competition is fierce. We recommend getting a quote from at least three insurers before settling on one. Premiums can vary widely from one insurance company to the next because their programs change over the years just as your insurance needs may change.

To make sure you’re comparing apples to apples, choose the same coverage options for every quote request.  Also ask to receive written confirmation of quotes by email. Something else to keep in mind: Some insurers include the 9% tax in their premiums, and others don’t. This could explain certain discrepancies between quotes you receive.

What are the advantages of using an insurance broker?

You can also work with a broker who deals with multiple insurance companies. Your broker can give you information on rates and answer questions specific to your situation. An insurance broker can be a good option if you fit a certain profile, e.g., you’ve had a number of accidents in the past, one or more insurers have cancelled your auto insurance policy for some reason, or you have a criminal record. Be sure to ask your broker to share all the quotes they’ve received and explain any differences.

What is the Fichier central des sinistres automobiles (FCSA)?

The Fichier central des sinistres automobiles (FCSA) is a database that belongs to Autorité des marchés financiers and is managed by Groupement des assureurs automobiles. It tracks every loss filed by a policyholder over the past six years, whether a claim was made or not. When you report a car accident or file a claim with your insurer, they send the information to the FCSA. Since July 1, 1991, auto insurers licensed to operate in Quebec have been able to access information on every accident involving Quebec drivers that results in an insurance claim.

If you want to take out a new policy, the insurer can check the information you provide against your file in the FCSA. Insurers can access your file to make sure you’re telling the truth, especially when it comes to accidents. (Source: Insurance Bureau of Canada)

5 more tips to save on car insurance

Here are a few more words of advice that could help you get the lowest possible premium:

1. You can save big by bundling your auto and home insurance with the same insurer. Most insurers offer discounts if you have multiple policies with them.
2. Choose a higher deductible, but be prepared to pay it if you get in an accident.
3. Outfit your ride with an immobiliser, alarm, tracking system, and other anti-theft devices.
4. Choose your wheels wisely. Some models—sports cars, cars with bigger engines, and SUVs, for example—can be more expensive to insure. Others are more popular with thieves. Visit Infoassurance.ca, the website of Groupement des assureurs automobiles (GAA), to find out which cars may cost more to insure.
5. You might also want to consider a hybrid or electric car—going green can often get you a discount.