Canadians looking to reduce their insurance costs have more options than simply cutting coverage, and exploring those options first is the better strategy in nearly every case, according to Kristen Gill, vice-president, general insurance at TD Insurance.
Gill's advice starts with understanding what a policy actually covers before making any changes to it, since cutting coverage without knowing what's being removed can leave a gap that only becomes visible after something goes wrong.
"The first thing would be to understand what you're covered for, and what you need to be covered for should an unfortunate event happen down the road," Gill said. "Having a basic understanding of what insurance is, what it's there for, and how it's going to help you in certain circumstances is very important."
From there, Gill said the better move is a conversation with an advisor or broker about savings opportunities that don't involve reducing protection at all, since many Canadians simply aren't aware of discounts they may already qualify for.
"There could be savings based on information which you might not have shared with your insurer yet that you could qualify for," Gill said. "Maybe you have an alarm, maybe you could qualify for an online discount, a number of different things. You could qualify for alumni or professional discounts."
Bundling is another straightforward lever, Gill said, and one of the more significant ones available to homeowners with a vehicle.
"Moving your home and auto together can qualify you for pretty significant savings on both of those policies," Gill said. "Before cutting, make sure you know your needs and make sure that you've exhausted all possible other avenues to save."
Usage-based insurance is a similar opportunity on the auto side specifically, Gill said, rewarding safe driving habits with real premium reductions rather than requiring a tradeoff in coverage.
"UBI is a great tool to save money for being a good driver and for making sure that you have great driving habits," Gill said. "The younger generation can definitely benefit from something like UBI because their premiums are high, and having great driving behaviours as a young driver can make a really big difference in their premium."
That same tool has proven effective in practice for young drivers specifically, according to Morgan Roberts, vice-president of RH Insurance, Ratehub.ca's in-house brokerage, who uses telematics with her own two teenage drivers at home.
"The monitoring of driving habits, I found that was kind of a scary thing in my house," Roberts said. "The kids both have it, and they know at any time we can see if they were playing on their phone, if they were speeding. It really did scare them a little bit to try to make better decisions."
Beyond telematics, Roberts said additional driver training beyond the minimum requirement is one of the most effective ways to bring costs down safely, since more seat time with a professional instructor tends to produce better habits than practice with a parent alone.
"If you need more than the 10 hours, get them the more than 10 hours," Roberts said. "There's a big difference between my kids driving with me and driving with an instructor. The instructor knows more what to teach them."
One of the biggest cost mistakes Roberts sees, however, happens before a young driver ever gets behind the wheel of their own car: buying the vehicle before checking what it will actually cost to insure.
"Don't buy the car first. Look at the insurance first," Roberts said. "Make a list, like 10 or 15 cars, and call your broker and be like, which ones are going to fit my budget? Look at the after, the before cost of everything first."
A single ticket can undo much of that planning, Roberts added, since even a minor violation can push a young driver's premium up sharply at an age when that increase is hardest to absorb.
"This could raise your rates by 15%, 20%, 30%," Roberts said. "If you're a student working your part-time job, that's a big swing. Let them know the importance of how much those mistakes cost."
Gill's closing advice applies just as much to Roberts' young-driver-specific tips as it does to general savings strategies: the goal isn't to accept a smaller policy, but to find every reasonable way to reduce the cost of keeping the one that's actually needed.
"Talk to your insurer about that," Gill said, "and try to find avenues to save money based on your own circumstances."
