In This Installment of Ask a Broker:
Every industry has its common questions and at times surprising answers, and the insurance industry is no different. Our brokers are on the front lines of Ontario insurance every day, and have a knack for clear answers that can save you time and money. In this instalment of Ask a Broker, the M&W team sheds some light on some of the questions they hear often related to auto insurance.
- Can I confirm that if on occasion I lend my vehicle to a licensed driver who is not listed on my policy, they are covered?
- I traded in my car, and when I told my insurance company, my premium changed. Why?
- Can I get insurance for a vehicle that is classified as ‘rebuilt’?
- My son just got his G1. Do I need to add him to my auto insurance policy?
- How do specific vehicle makes and models affect how much I pay for insurance, and which vehicles are cheaper to insure?
- Will safety features on my car lower my insurance?
- Doesn’t my rate go down with every year of clean experience?
- Can I reduce my coverage if I park my vehicle for a period of time or over the winter months?
- What is the difference between Comprehensive and OPCF 16?
- How much liability insurance do I need?
- I’ve been driving for 30 years with a clean record. Why is my auto insurance rate going up?
Can I confirm that if on occasion I lend my vehicle to a licensed driver who is not listed on my policy, they are covered?
Answer: If the driver in question does not reside in your household and will only be borrowing your vehicle on the rare occasion, they would not be required to be added as a driver on the insurance policy. It is important to note, that when you lend your car you lend your insurance. Therefore, if the person borrowing your vehicle is involved in an accident it will show on your record as a claim against your insurance. It is also important to ensure that the person you’re lending your vehicle to does have a valid licence.
Lyndsey Dewdney – Renewal Specialist at M&W Insurance
Answer: Your premiums can go up or down based on the year, make and model of the vehicle. Things like safety features, value of the vehicle, cost of repairs, accident and theft history of that model can have an impact on the price when you change your vehicle mid-term.
Laura Loder – Account Manager at M&W Insurance
Can I get insurance for a vehicle that is classified as ‘rebuilt’?
Answer: The short answer is yes. But it can be challenging to get insurance for a rebuilt vehicle. For one thing, some companies refuse to insure this kind of vehicle, so your choice of insurers will be limited and you may pay more for this reason. Also, even those insurers that are willing to insure a rebuilt vehicle may only offer basic coverage, meaning they may not cover your car for physical damage (collision and comprehensive coverage). So yes, you can get the vehicle insured, but you may not like the insurance options available to you.
Ian MeWhinney – Account Manager at M&W Insurance
My son just got his G1. Do I need to add him to my auto insurance policy?
Answer: No, you don’t need to add him to the policy, but It’s a good idea to let your insurance company know when your child gets a G1 license. The good news is that it won’t affect your premium, and he’ll be covered under your policy when he drives your car under your supervision with his G1.
When he gets his G2, you’ll need to add him as a listed driver, and unfortunately that will affect your premium. If he takes an approved driver training program, that will help reduce your insurance costs during his first 3 years of driving.
Marie-Claude Carlton – Account Manager at M&W Insurance
How do specific vehicle makes and models affect how much I pay for insurance, and which vehicles are cheaper to insure?
Answer: When you get an auto insurance quote, one of the factors the insurance company uses to arrive at a price is the theft and accident history for other vehicles with the same year, make, model as yours.
Other factors include:
- Safety features
- Value of vehicle
- Base model or added features
- Newer vehicles sometimes have new vehicle discounts
- Foreign vehicles may be more expensive if you need replacement parts
- Car alarms! Can get you discounts
You can find lists of the cheapest vehicles to insure on Google, but I typically tell people who are looking to insure young, male drivers (newly licensed) to go for a few years old crew cab pickup truck. Stay away from “high offenders” like Honda Civics and Toyota Corollas.
Laura Loder – Account Manager at M&W Insurance
Will safety features on my car lower my insurance?
While many modern safety features are making it safer to be on the road, this may not necessarily translate into insurance savings.
Some markets will provide discounts for having features like AEB (Autonomous Emergency Braking) many insureds will see their premium increase with a new vehicle.
There are a few reasons for this increase in premium. The first is the increased cost of repairs from having to adjust these safety features (E.G. Re Calibrating windshield cameras)
Newer vehicles also have special endorsements older vehicles would not get including the waiver of depreciation. In the case of a model that has not been on the road before, lack of statistics can cause the premiums to be inflated.
Shane Rosenberg – Account Manager at M&W Insurance
Doesn’t my rate go down with every year of clean experience?
Answer: It’s a common misconception that your rate would improve with every year of clean driving experience. While this is true for newly licenced drivers or for years following a claim or ticket, it does not apply to drivers who already have many years of clean driving experience. Every year of clean driving experience only keeps you at the same rating because there isn’t a better one.
So every year of clean driving doesn’t make your rate go further down, it helps keep it the same. When you have achieved the maximum rate available and are receiving all applicable discounts, you are going to experience changes that are the result of the marketplace fluctuation. We’d then take an in depth look at rates from other companies to see if another insurance company is offering a better rate.
In shopping we will find one of two things; either there is a better rate we will help you take advantage of, or worst case, we confirm that you are already getting the best rate. Either way, you will know with confidence that you aren’t leaving any money on the table.
Alex Gemmiti – Service Team Leader at M&W Insurance
Can I reduce my coverage if I park my vehicle for a period of time or over the winter months?
Answer: You have a couple of options here. You can reduce the coverage to comprehensive only, which covers you for things like fire and theft. Or you can apply an OPCF16 endorsement which covers comprehensive losses as well as providing some accident benefits coverage as well. This may be appealing if you’re traveling within Canada and the US as you can still use these benefits if you are injured in a different vehicle.
Not every insurance company offers both options, and the options may differ if you have another vehicle on your policy. About half of insurance companies will only offer an OPCF16 endorsement if there is only one vehicle on the policy. This endorsement will still reduce your monthly payment, but not by as much as a full reduction to comprehensive only.
An OPCF 16 also has some limitations. It must be applied for a minimum of 45 days, and can only be applied twice a year.
In either case, you may also need to supply photos of the vehicle if you do not have comprehensive coverage already. If you own a right-hand drive vehicle, they may also require an updated appraisal depending on the value.
Always be sure to contact your broker when you return as coverage will need to be added back to the vehicle before you drive it again. You can request to reduce or add coverage by phone or email without completing a new application. All coverage changes must be confirmed by a licenced broker before they take effect.
Best thing is to contact our office and talk to one of our licenced brokers for your best advice.
Brian Dermody – Account Manager at M&W Insurance
What is the difference between Comprehensive and OPCF 16?
Answer: Most people who park their cars for the winter for various reasons commonly ask to have “Fire and Theft” added for the storage period, but what they fail to realize is that all other coverages are removed as well, which they may need.
For example, a vehicle that is parked out in the open may be hit by another vehicle and end up being a DCPD claim. If the car has comprehensive coverage only, this would not be covered because DCPD was a coverage that was removed. If the vehicle had the OPCF 16 – Suspension of coverage instead of comp only, it would have been covered. This coverage comes with the requirement of the vehicle being parked for at least 45 days in order to qualify and simply suspends all the listed coverages on the policy. It is ideal when there is only one vehicle that is insured by the client since it continues to provide accident benefit coverage (anywhere in Canada or the US) during the suspension. It would also cover a liability incident where the vehicle rolled down the driveway and caused third party damage or injury. The only time comprehensive coverage would be a good idea is if it is not the client’s only vehicle, and is parked in a garage away from the possibility of being hit by another car.
Christina Stavropoulos – Account Manager at M&W Insurance
How much liability insurance do I need?
Answer: Liability insurance, also known as third-party liability, is a mandatory coverage in Ontario to drive a car. It covers you in the event that you cause injury or damage to another person or their property. This coverage pays for the costs of lawyers and legal proceedings to defend you from such actions as well. So you could find yourself using this coverage, even if you are innocent.
At Mitchell & Whale, we recommend that all auto insurance policies carry $2 million in third-party liability coverage, even though the provincial minimum may be lower. The cost to increase your limit may be as low as $50-$150 a year and invaluable if you need to use it.
As Ontario’s legal system becomes more Americanized, people are more likely to sue for over $1 million, and court awards more frequently exceed this limit as well, it is certainly better to have the peace of mind.
Home insurance also typically includes liability coverage if someone is injured on your property or as a result of your negligence. We also recommend $2 million in liability coverage for your home, condo or tenants insurance policy.
Some insurers offer you what is called an “umbrella” liability policy, that protects you regardless of whether the liability is related to your car, your home, or neither. We strongly recommend that our clients consider a $5 million umbrella policy, which can be much more affordable than you might think.
Tracey Gilmore – Account Manager at M&W Insurance
I’ve been driving for 30 years with a clean record. Why is my auto insurance rate going up?
Answer: Although you do get credit for your clean driving record, you would usually reach your maximum driver rating (star rating) after 6 years of clean driving. After the sixth year of clean driving, you don’t get an additional discount for your 7th, 10th or 20th clean year.
That said, insurance rates in general are going up across the province, so it’s not uncommon for long-time clean drivers to get an increase at renewal time. If you’re not happy with the rate from your current company, your broker may be able to find another company that will offer a better one.
Alex Hillhouse – Personal Lines Insurance Broker