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Lower your insurance costs

There are ways to pay less for auto coverage despite soaring premiums, RICHARD BLOOM writes

Auto insurance has become a hot-button issue nationwide as premiums have skyrocketed. But there are ways you can lower your insurance costs, or at the very least, prevent them from surging further, industry experts say.

On the back of rising injury costs, falling stock markets and a global slump in the insurance business since the Sept. 11, 2001, terrorist attacks, insurance fees have been ratcheted higher.

Reports have cited industry officials saying it is not uncommon for some drivers who have been deemed high-risk to be quoted premiums of up to $8,000 a year.

Complaints from scores of associations are forcing many provincial governments to consider radical changes to auto insurance. Ontario is promising regulations to limit injury-claim costs. Alberta's Conservative government is contemplating a government-run insurance plan. Earlier this week, the four Atlantic premiers agreed to adopt a common, harmonized plan to lower rates that have increased in that region by as much as 70 per cent.

Dan Danyluk, chief executive officer of the Insurance Brokers Association of Canada (IBAC), pegs most of the dramatic rise in auto-insurance premiums to Canada's lacklustre economic growth.

"Insurance is cyclical. . . . There are always hard markets, and what we're in now is a hard market," he said in an interview.

Mr. Danyluk insisted rates will eventually go down when insurance firms' investment income starts to rise (in addition to premiums, insurance firms generate revenue by investing money in the markets) and the economy shows signs of a significant rebound.

"We just don't notice it when it goes down," he said.

But other than waiting for a market turnaround, Mr. Danyluk said there are some immediate measures the average car-owner can take to prevent sky-high charges.

Sitting atop his list of tips: Immediately report cases of insurance fraud to the police.

"It's your moral and ethical responsibility. And believe it or not, it lowers your insurance," he said.

"The guy who deliberately does damage to a vehicle, you're paying for that. You don't do that, so why should you be expected to pay for somebody to do that?"

Fraud costs Canadian policy holders more than $1-billion each year -- working out to about 10 per cent of total premiums paid, according to a report from the Canadian Coalition Against Insurance Fraud.

In other words, 10 per cent of your premium is spent dealing with fraudulent claims.

Other suggestions offered by the IBAC:

Do your research. Some cars cost less to insure than others. Investigate rates before you buy the vehicle, or else you could be forced to pay a higher-than-anticipated amount.

Install an anti-theft system.

Avoid breaking the law. Whether you're charged with speeding, dangerous driving or impaired driving, the worse your record, the harder hit you'll be.

Drive defensively. The more claims you make, the higher your risk profile, and the higher your costs.

Where possible, take public transit. Your insurance company likely has various fees associated with the length of time you're in your car; the less you drive, the less you are likely to pay.

Ted Boyd, an insurance broker with Newmarket, Ont.-based Charles E. Boyd Ltd., offers motorists seven "money-saving ideas" through his company's Web site (http://www.autoinsurancetips.com).

While two tips (research your vehicle and drive less) mirror those from IBAC, his firm also suggests:

Raise your deductible. "The disadvantage of raising your deductible is that when you do make a claim, you'll pay more. The advantage is that your insurance costs yearly go down. Go a number of years saving money without making a claim and you're ahead."

Drop collision and/or comprehensive insurance on older vehicles. Sometimes the deductible plus insurance amount isn't worth the price of the car.

Consider the cost of insurance when deciding to move. Insuring a car in a large city's downtown can be significantly higher than insuring the exact same vehicle only a short drive away.

Make sure your insurance company knows your car's specific details. "Many manufacturers offer similar model names for vehicles and insurance costs can vary. Even two or four doors or the wrong model can effect the cost," Mr. Boyd wrote.

© The Globe and Mail

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