A vast majority of car insurance shoppers in Alberta are looking for one thing and one thing only: the cheapest possible insurance for their cars. In all fairness, we get it. At the end of the day, the almighty dollar is what reigns supreme for most consumers. With that being said, we hope that by reading this short article, we might be able to change a few minds. That maybe, just maybe, price shouldn't be the only thing you care about.
There are a ton of ways to get better rates on your car insurance. We're here to provide context to what those savings mean. Without further ado, here are four terrible ways to save on your car insurance.
- Raise your deductible to $25,000
- Drop your liability coverage to $200,000
- Drop your insurance endorsements
- Put your car on parking coverage (and continue to drive it)
How Raising Your Deductibles Can Save On Your Car Insurance
While most people maintain a car insurance deductible somewhere between the $500-$1,500 range, you are not required to keep those deductibles. It is commonly known that raising your deductible can lower your car insurance premiums, so why not raise them all the way to $25,000?
*$25,000 is the highest deductible most companies offer
By raising your deductible to $25,000 you could save yourself $10-15 a month on your car insurance! What do savings like that actually cost you? Provided you have collision and/or comprehensive coverage, you pay your deductible every time you have an at-fault claim or you're a victim of circumstance.
You would be responsible for paying that $25,000 before the insurance company would pay a nickel for your vehicle's repairs. Keep in mind the following situations where you would need to pay your deductible:
- An at-fault collision
- Someone hit and runs your vehicle
- Accidental collision with an animal
- Accidental collision with an inanimate object
- Your vehicle is stolen
- Your vehicle is vandalized
- Your vehicle catches fire
- A tree crushes your car
- Your car falls into a sink hole
- Many more
In most of the listed scenarios listed above you will have little to no control over damage to your vehicle. If your vehicle is worth less than $25,000 you might as well not even claim at all. High deductibles shift a large portion of the risk to you without reaping a substantial financial reward.
Lowering Liability Coverage Will Save On Premium and Cost Big On Lawsuits
In Alberta, you’re only legally required to maintain $200,000 in liability coverage on your car insurance. At Armour Insurance, our office standard is $2 million in liability. The cost difference between the 2 premiums is around $30/month, but what does that extra $1.8 million in liability protection actually mean?
Liability coverage covers damage or losses to others. This includes personal property and bodily injury. In Alberta, there is no legislated maximum an individual can receive for personal injury claims. Since 2018, Alberta has seen hundreds of car insurance claims over $1 million in damages.
For the sake of argument, let's say you are in a bad car accident where you are at fault and cause $1.5 million in property damages and personal injury. If you have the Armour standard $2 million in liability coverage, the insurance company will pay out the damages on your behalf. If you were to only have $200,000 in liability, the insurance company would pay out the first $200,000, then you would be personally responsible for the remaining $1.3 million in damages.
By saving yourself $30 a month, you could cost yourself everything. For this reason, Armour will not write insurance policies below $2 million in liability coverage.
Drop Your Insurance Endorsements, What Could Go Wrong?
Insurance endorsements are the extra add-ons that provide greater coverage for specific situations. Depending on the type of coverage you have, there are many endorsement options available. Some of these include:
- Family protection
- Loss of use
- Claims forgiveness
- Minor conviction
- Claims advantage
- Hit and run deductible waiver
- Damage to non-owned vehicles
These endorsements are non-mandatory supplemental coverages that protect you from a plethora of situations. Full details on car insurance endorsements are available here. These endorsements combined usually cost less than $150 annually. By removing endorsements from your car insurance policy, you're likely to save a little over $10 monthly.
These endorsements can get you coverage for a rental car, insurance for that rental car, a waived deductible for hit and runs, coverage for uninsured or underinsured motorists, and much more. For the negligible amount in insurance savings, endorsements offer the most complete protection for you, your passengers, and your vehicle. Dropping endorsements could cost you massively.
Parking Insurance Is So Cheap, Why Not Just Use That?
Parking insurance is indeed a cheap alternative to other car insurance. It covers what would be covered under comprehensive insurance, rather than the liability portion. If you're parking your car for more than 45 days, putting your car on parking insurance is a very affordable and reasonable option to maintain coverage on a vehicle. Full information about parking coverage is available here.
While parking insurance is an affordable option, it is meant exclusively, 100% for parking only. It does not carry any liability coverage whatsoever. That means if you drive a car that only has parking coverage, it's virtually the same thing as driving without any insurance at all.
If you're caught driving without insurance in Alberta, you will face a fine of at least $3,000 up to $10,000 and you'll get an automatic court appearance. Additionally, your vehicle will be towed and impounded at your expense.
If you were to be in an at-fault accident with only parking coverage, you are likely to face fines, lawsuits, and an insurance record which will make it incredibly difficult to regain insurance. You may also be at risk of jail time or other legal consequences. Driving when your vehicle is on parking insurance, is a very bad idea.
Conclusion
While it's understandable that many car insurance shoppers prioritize finding the cheapest possible insurance, it's important to consider other factors beyond just price. This article has highlighted four terrible ways to save on car insurance that may initially seem appealing, but ultimately come with significant risks and drawbacks.
Making an informed decision on your car insurance needs is crucial for your financial well-being and peace of mind in the long run. If you want expert advice on your car insurance, we're here to help.
