Small things that can trip up your car insurance rates

If you’re the type to haggle with a cop or a judge over demerit points because of how it might affect your car insurance rates, it may come as a surprise to learn that your insurance company doesn’t care. Oh, they care about the ticket – just not the points.

Most of us are fairly cognizant of what will compromise our auto insurance: causing crashes, driving drunk, claiming for every pothole bounce and windshield chip. In truth, there are a lot of other things that can be just as damaging to your insurance reputation – and your statistical one. And that in a nutshell determines how much you pay: your history and your position in the pack – numerically speaking – of everybody else on the road.

A reader recently discovered the hard way that errant bookkeeping can come back to haunt you. After a series of moves and a job change that also resulted in a change of banks, she had been juggling automatic withdrawals and thought she was current. Turns out, in actuality, three consecutive payments hadn’t gone through to the insurance company, and the letter that finally caught up to her wasn’t a reminder, but a cancellation of her insurance.

We all know a cancelled policy marks you like a bucket of blood in shark infested waters. What you might not have known is that having your policy cancelled for non-payment can be as severe as having it cancelled for auto-related incidents.

Says Debbie Arnold of Sound Insurance, “my best advice is, never let the policy be cancelled for non-payment! If you’re running into financial issues or will be out of the country, remove or suspend coverage.” My reader eventually was able to secure coverage with another provider, but at a substantially higher premium. More providers are offering email renewals and updates; if you move make sure you update your information with them to avoid a non-payment snafu.

While traffic violation demerit points don’t figure into the insurance equation, there is a scale of points insurance companies do use. “Cancellations for non-payment are chargeable for three years and worth two points, minor convictions are worth one point, chargeable losses for drivers licensed over six years are two points.  Incurring four or more points puts you in a “substandard” market,” explains Arnold. So while you may be fighting to get rid of demerits off your licence, you’ll also have to be keeping an eye on what can count against you in another system.

Your location is another area you can potentially jeopardize your coverage or rates. In Ontario, you have six days to update your change of address on your ownership and driver’s licence. Six days. Invalid information could result in a police charge, but failure to apprise your insurer of your new locale could also cost you in the event of a claim. Where your vehicle is kept is a determinant in what you pay; saying you live in North Bumble when you live in downtown Toronto may save you money until something goes wrong, at which point your insurer can decline to cover you retroactively, or in the best case scenario, back charge you to honour the claim. It’s a risk.

About North Bumble: Arnold points out a government minister is suggesting insurers eradicate the use of territory as a rating factor which she notes, and I agree, is short sighted.  “People in Northern Ontario where the claims are few and less severe will be paying for Brampton claims which are frequent and costly.” There is a reason your cousin pays less while living in a less densely populated area. Lying about where you live – a material change in risk – can cost you your coverage. Arnold notes that many clients are often surprised at the difference in insurance even just a few blocks from where they live. “Always check when you’re moving to avoid sticker shock.”

You probably have accident forgiveness on your policy, or perhaps accident waiver. The “forgiveness” gives you a pass on the rate hike you would sustain for an at-fault crash (I hate the word accident; I think the insurance companies should get it out of their wording), though you do drop a level in your ratings. The “waiver” lets it go without dropping your ratings. Keep in mind, however, it is only relevant to the carrier you are with at the time of the accident.  It does not transfer to other insurers so don’t bother shopping if you’re using that accident waiver for a loss within six years; your record will show an at-fault a new carrier will not forgive or waive.

Your driving record and your insurance record: related but different, and both need to be maintained and guarded.