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4 Things You Need to Know About Car Insurance

The ins and outs of vehicle coverage can be tricky. Here’s what you need to know to understand and navigate the system.

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Differentiate Between Forgive and Forget

Accident forgiveness isn’t just an attractive option-for a nominal up-front fee your first accident-based claim will lead to little or no rate increase, despite still going on your record-it’s also a loyalty strategy. “If you decide to change insurers, that forgiveness won’t be taken into account,” says Ting, meaning you’ll likely face a higher bill.

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Factor in Potential Theft

“People sometimes purchase a vehicle only to discover they can’t afford the coverage,” says Warren Ting, a business insurance professor at Toronto’s Seneca College. Tip: determine a car’s popularity among thieves-a factor in insurance cost-before you buy by consulting the Insurance Bureau of Canada’s annual list of the 10 most stolen vehicles.

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Make it Personal

Good behaviour has its rewards. Usage-based insurance, available in Ontario and Quebec, factors in a driver’s habits, measured by a black box attached to their car, to help calculate rates. Motorists who resist constantly flooring the accelerator and braking hard can reap savings of up to 25 per cent.

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Defend Against Depreciation

If you finance a car that ends up stolen or totalled, a replacement cost policy will cover you up to the original purchase price, thus avoiding a situation where your remaining loan balance exceeds the vehicle’s current value. For repayment periods above 72 months, George Iny, president of the Automobile Protection Association consumer advocacy group, recommends purchasing the policy through a broker.