When I first got my license, my parents co-signed on my car insurance. Nearly 20 years, a wife and two kids later, I was still using the same insurance company for my home, auto, and life insurance. But, last year, prior to moving, one of the ways we tried to reduce our living expenses was to shop around for a better rate. Good move. Despite all the “loyalty” discounts I was supposedly receiving, we were easily able to find a competing company that offered us more comprehensive coverage, for significantly less. Shopping around can save you some major money, you just need to keep a few caveats in mind.
Beware the penalty
In order to keep their existing clients, some insurance providers charge penalties for cancelling a policy mid-term. Your current provider is required to send you a renewal notice one month before your policy expires. If you’re sticking with them, you don’t need to do anything: coverage continues as always. But think of the renewal notice as a reminder that it’s time to comparison shop. You’ll have plenty of time to inquire about alternative rates and then, if you choose, you can cancel at the end of your term without any risk of a penalty.
Make sure the apples match the apples
Odds are, you’ll do your research online or by making a few phone calls. But don’t just focus on the rate. Make sure you read all the fine print. Most auto policies, for example, will include coverage on rental cars and partial coverage for any towing expenses you may incur. But a bare-bones policy may not include these perks – something you’d need to consider if you frequently travel, or drive an old beater.
Some policies may provide limited coverage during the initial activation period. As a result, you might want to avoid switching policies every six months trying to chase a lower rate. (Not to mention the hassle of making all those calls and analyzing all that fine print.)
Give the old guy a chance
Once you’ve found a rate you like, and are happy that all of your needs would be met, call up your agent and see if they can beat it.
Timing is everything
Finally – and perhaps most importantly – make sure your new policy is activated before your old one expires. Murphy’s Law – your car will get stolen, your house will burn down, and you’ll get hit by a bus in the middle of a one-hour gap where you’re not covered.
Writer for RateSupermarket.ca