Affordable Automobile Insurance

You are excited because your new car insurance looks pretty inexpensive. At the time of renewal, however, shopping around and comparing different automobile insurance rate may help you substantially cut your insurance costs.

We are still not used to the idea of choosing our car insurance policy. People just don’t want to move from one company to another just because they don’t want to answer some phone calls or go through insurance comparison websites. There are many companies these days which are offering substantial introductory discounts as well as online discounts. Shopping around for automobile insurance policies, therefore, makes a lot of sense financially.

Before you get tempted into buying an inexpensive insurance policy, make sure you have read the fine print. If one insurance company is offering comprehensive car insurance cover for the same price quoted by another company for a third party insurance cover, you should be suspicious. Find out if there is a hidden reason behind that low cost policy.

The insurance cover you are buying has several levels of cover. Third party cover is the minimum cover which is legally binding on all drivers. This coverage comes into effect when your vehicle causes damage to another person or their property. The next level of insurance consists of fire and theft, and then damage to the vehicle. Comprehensive car insurance covers all three levels of insurance.

Many buyers make the mistake of believing comprehensive policy includes – coverage when you are driving others’ car, courtesy car, wind screen coverage and European coverage. In order to look inexpensive, insurance companies might have removed these extra features. If you want these covers, they will be added as chargeable extra. Also, it’s a good idea to check your coverage level before you decide to go abroad. It may be possible that you need to increase your time limit or chargeable coverage level.

Auto insurance rates for Ontario drivers are likely to soar skywards in the coming months, though the government says it is going to address the issue of hike in auto insurance premiums. Recently the Financial Services Commission of the state approved rate change proposal for many insurance companies. The commission’s report states that the average increase in insurance rates over first three quarters of 2009 were 6.2%.

According to a newspaper report, premiums may actually go up by average 9.1%, whereas Toronto alone will experience premium increase of about 14%. Insurance companies say the rates are rising because of rising rehabilitation and physiotherapy costs for accident victims.

A number of recommendations have been made to control the rising insurance costs. One such proposal states that minor injuries cover should be kept limited at $25,000. Government is making attempts to consider other proposals which will help strike an adequate balance between insurance affordability for drivers and protection.

There is still some time to go before the state budget is presented, and till that time people will have to struggle with fast increasing automobile insurance rates. About ten automobile insurance companies have already been allowed by the regulatory agency to increase their insurance rates in the last year. These companies cover about one fourth of Ontario automobile insurance market.

If one looks at some extreme examples, insurance premiums may increase by as much as 30% in some cases, depending on driving record, insurance company involved and community. In Greater Toronto alone, the average car insurance premium was $1682 in 2007, whereas now it has increased to $1917 in 2009. The Insurance Bureau of Canada says insurance premiums are calculated by factoring cost of claims and investment income generated after the premium is received. Other things that are factored include taxes, selling costs, overheads, account settlement costs and reserved funds.