Ahem.
In the grand tradition of me ignoring every piece of recommended advice in money matters, like my adventures in how not to start an emergency fund, let me tell you about the time I bought car insurance.
It is a case study in what not to do.
If you’re looking for the steps not to take, here are all four of them.
Because I did them all.
Step One: Know nothing about how to buy a car
This is the foundational step, because if you know anything about the car-buying process, you’ll probably avoid this entire debacle in the first place.
When I went to buy Little Car, it was laughable how little I knew about the actual process of buying a car. From…
“How do I get license plates?”
to
“So do I like… take it right now?”
…I probably asked the silliest questions that the salesperson had ever heard before.
She probably thought I had never heard of Google, to be honest.
I also knew nothing about the upsells and add-ons that I was going to be pitched on, even when buying a low-end used car so I could pay for it in cash. I’m not saying I regret getting the extended warranty, but I am definitely saying it would have been good to know what an extended warranty was, and whether it was really worth the money ahead of time.
To be perfectly frank I still don’t know, so if you have opinions, feel free to let me know in the comments.
Step Two: Don’t compare quotes when you buy car insurance
Instead of doing my own, independent research about car insurance, here’s what I did instead.
I knew that I needed car insurance, so I asked my mom how to buy it. She referred me to her insurance broker, and in the interest of not learning any more than I had to about the process, I signed on the dotted line.
Did not pass go, did not do any research about whether I was getting the best rate available.
Spoiler alert: I was not.
Step Three: Don’t educate yourself about how insurance works
I’m sad to say it was only in the past year that I really started to think about the purpose of a deductible when it comes to insurance – and that I only started thinking about it when it came to buying pet insurance, after literally years of paying for insurance on my car.
I didn’t even know how much my deductible was, to be honest.
When it comes down to it, I’d argue that your deductible is the thing you should pay the most attention to when choosing what level of insurance you really need. (Which shows you how much I really did have to learn.)
Deductible: the amount you’re on the hook to pay in the case of a claim filed with your insurance. For example, if the total bill is $2000.00, and your deductible is $1000.00? You’re paying that first $1000.00 out of your pocket before anything else is covered.
If you go with a low deductible, but you have a hefty emergency fund and a clean driving record, and you’d be able to cover a bit more of the cost if you ever did need to claim something on your insurance? You might be paying more than you should every month.
On the other hand, if your deductible is really high, and you don’t have the funds to cover it if something did go majorly wrong, you’re not getting the coverage you really need.
I never knew any of this, although in retrospect, when I bought the car I did need a lower deductible, because I had just raided my savings to pay for the car in cash. That said, since then I’ve beefed up my emergency fund and stopped making some classic emergency fund mistakes with it, so when I go to renew, I’m going to opt for a moderately higher deductible and save myself some monthly fees.
Step Four: Wait years before comparing rates between different car insurance providers
Going back to step two, I did literally no research before buying car insurance.
At that point in the (somewhat overwhelming) process of buying my first car, I was so fed up with not knowing anything, and I felt like I was entirely out of my depth. So when I was offered the chance to totally abdicate responsibility for one part of the process – the insurance part – I did.
Hard.
While I could stand here and tell you not to do that, not to take the easy way like I did, it wouldn’t be entirely fair, because having an easy option at that point was the best thing ever.
But a year down the road, when it was time for me to renew my policy, I wasn’t in the middle of a stressful car purchase. At that point, I should have done some basic research on whether or not I was getting the best rate available. Or even close to the best rate.
That’s when I should have compared quotes. But nooooo.
Instead, I stuck with the same insurance provider for another year.
It was only over this past summer that I finally, finally got around to comparing car insurance quotes with different companies here in Canada. I found a few different places that would offer quotes online, which made the process laughably easy.
LowestRates.ca was one of them, that I found through a Google search for “compare auto insurance Canada.” I also checked out Bel Air Direct’s quotes directly (ahaha puns, I’m so sorry) since I had heard good things about their rates, and they also offered an online quote tool.
Now, there are a lot of variables involved in calculating insurance, so comparing quotes does require a bit of time on your part, but in my experience, it’s been all of 10 minutes – and that’s on the long side.
Those 10 minutes showed me that for a comparable level of coverage, I could save – at a minimum – over $40.00 every month just by switching my car insurance.
That’s $480.00 a year. Minimum.
Now, as with anything, there are pros and cons to jumping ship from your car insurance provider. I’ve heard that some policies can be easily cancelled if you need to make a claim within your first 90 days with them, and of course, switching itself can be time consuming.
But you owe it to yourself and to your bank account to educate yourself about your insurance options, whether it’s car insurance or pet insurance or renter’s insurance or whatever-things-you-love insurance. I’m not here to judge what you want to insure.
I am here, though, to tell you that if you take nothing else away from this entire post, it’s this.
Doing a tiny bit of research can save you so much money.
Always do the research, you guys.
Have you ever figured out after the fact that doing your research would have saved you a ton of money? Or had adventures in insurance purchasing? I would seriously love to hear about it! (Please tell me I’m not the only one who learned that the hard way.)
I did the same thing! When I bought my little City Golf, it was a rushed purchased and I was learning all about a car, so when it came to insurance I talked to my husband’s father’s provider and…signed on the dotted line.
I’ve since gotten several quotes and what I’m paying now is pretty comparable to competitors, but I definitely didn’t shop around at first. Rookie mistake!
Totally! And I’m glad I’m not the only one who found the car-buying process a little overwhelming, haha. It’s just so much adulting all at once! Not to mention handing over thousands of dollars for the biggest purchase of my life.
I’m really looking forward to my renewal when I can start paying a more competitive rate, either with my current provider or by moving to a different company!
Great tips. I like the part about not comparing because so many people do this. It’s easy to call up one insurance company for a quote and if it fits the budget then some people dive in not shopping around. The process to find out if you qualify for insurance is a bit daunting at times so I can see why some people throw in the towel at the first best quote they can get. When I moved to Canada I had to learn all about insurance as it’s different from the UK. I’ve come a long way and likely would have made some of the same mistakes had it not been for my wife being Canadian. Great post.
Thank you so much! It’s so awesome that your wife was able to help you with the system – even as a born-and-bred Canadian who kind of knows what’s what, when I think about how long it has taken me to get a handle on how to do the smart thing in our system I can’t even imagine trying to learn it from scratch somewhere where I didn’t grow up with it!
Good info. I’ve actually had the same insurance company for nearly 20 years. I do always check rates, and when I can find something lower, I’ll go back to my agent with the comparable quote and ask for them to match or beat the price.
That’s a really smart idea, and I think that’ll be my first step, since the agent I worked with was really nice, and helped me through the process when I first got started. I’d like to see if she can come close to the other rates I’ve found before jumping ship – or even get close enough that it’s worth sticking with them!
Nice post.
It’s interesting how companies do not care about loyalty and you will pay through the nose if you don’t pay attention.
Right?! It’s the same with cell phones I find. Tons of new deals and incentives to switch, but I’ve had horrible luck getting competitive rates as a longtime customer.
Then I asked work to cover my cell phone, haha, and they took it over for me. But seriously, that should not have been my best option after years and years of business!
I’m so glad I don’t own a car anymore. It was such a headache. Maintenance, insurance, property taxes, etc. Luckily I’ve always been a bit of a negotiator so I negotiated the price down on the purchase of my car when I bought it and every year or so went out and compared insurance rates.
That’s awesome – and definitely the right way to go about things!
I lived blissfully car-free for about two years while I lived and worked downtown, but when I moved out to the suburbs (to be closer to a new workplace, actually) a car made the most sense if I wanted to go anywhere – and it drastically shortened my commute, since inter-suburb travel takes about as long by bus as it would to commute downtown, haha. I find it does open up a few new possibilities that I’m happy about, like impromptu trips to the cottage sans rental car, and visiting friends in hard-to-bus-to places. That said, do I relish the extra expenses? Not even kind of.
I am with the same insurance provider my family has been with for years. Quite honestly, it’s on my list to shop around since my latest phone call experience with them! For several years, I was told again & again that when you turn 25 and have a clean driving record, your rates will lower! Low & behold, last March I was reeling to finally call in the day of my 25th Birthday. I got ahold of my agent and her response was “Oh….we don’t do that any longer.” WHAT?! This was one of those perks I was waiting for since I received my license! She then proceeded to tell me that “I have a great rate” and it’s “Even better than hers.” Yikes…quite honestly, my rate isn’t too astronomical & my deductible is $500. BUT if I can receive a lower rate elsewhere while shopping around, I would like to try! It’s definitely been on my list and now you’ve encouraged me to get started on this some more. 🙂
Oh no! I’m so sorry to hear that – I’ve heard similar things about “being with the insurance company for a set amount of time” and “being common law” but with my current provider, neither has seemed to make much of a difference in my rate. It’s about a full $1.00 cheaper per month than it was when I started… which I’m not writing home about, let’s put it that way!
I’m just excited to have a conversation where, when faced with the “You have a great rate!” statement, I have actual numbers and examples to back up why no, actually, I don’t have that great of a rate, and we should really talk about that. (I say excited but tbh this will probably all take place via email because I’m a total chicken when it comes to hardball negotiations.)
LOL. Someone recommended seeing if your current insurance company will beat the quote. You could check on that, if you’re happy with them in other ways. (In some cases, I think it’s worth paying a tad more just to be with a reputable company — if you buy the rock bottomest rate, be sure it’s with a company that won’t fight you all the way if you do have to make a claim.)
That’s my one worry for sure – I’m totally going to see if my current company can come close to the rates I’ve found online. There’s definitely something to be said for not going with “Al’s Pancake World and Car Insurance Company” just in case you do have to file a claim, so I’ll give my current provider a first chance to improve my rate (armed with competitive data this time!)
Des, this is hilarious. I too remember standing there and being like, do I own this large machine now? Am I supposed to take it home?
I’m pretty impressed that you actually learned lessons from your experiences, whereas I was just like, this sucks! And it’s so expensive! And I don’t get it! (And so I sold my car and learned no lessons, The End.)
Choosing deductibles is such a crapshoot. The place where I’ve encountered that most often is in thinking about health insurance plans — I don’t know if you have to choose among different plans with different deductibles in Canada (though by all accounts your healthcare system is way better than ours), but it can be hard to sort through.
If I ever buy another car & associated insurance I will be revisiting this page… 🙂
Bahahaha right back at you on the hilarious front – I love how you tell the Sarah And The Car story, that was priceless. “Learned no lessons, The End.” Pure gold.
On a much less funny note, I cannot even imagine what it must be like to have all of the extra information and all of the extra pressure choosing insurance and deductibles and whatnot for your health. Like, a car is important, but it’s not your body. We don’t have much like that here – to be entirely honest, the only “health insurance” I’ve had to deal with is my work policy, which covers stuff like dental care and vision and massages, and is pretty much “This is what you get, enjoy!” For the big important stuff, like hospitals and regular medical care, it’s pretty much free – which makes me feel so guilty when talking to people who don’t have access to it! I’m so Canadian about this but I will defend our socialist healthcare until my dying breath. Basic health and emergency care shouldn’t be a business.
As I said, soooo Canadian! And did I mention I feel super guilty? And am sorry about the whole “figure out your own healthcare deal” thing? I really, seriously am. And I wish you nothing but good health and low, low health insurance costs.
Hahahah, you’re the best! I’m glad that the story ultimately has a happy ending though 😉 I’m with USAA (a military bank in America) and they do great quotes + customer service for car insurance, so I was lucky and never had to deal with this when I owned a car, but something tells me that my journey might have been similar.
I’ve heard the name in and around the PF blog community, and I’ve always heard good things about USAA, so yay for great insurance rates! I’m so happy you had a good experience with it! And thank you for the kind words Taylor – I’m crossing my fingers that all this research does, in fact, lead to a happy ending in the form of lower insurance rates!
TBD. My negotiation skills are only so-so.
Can you write a book about “how not to adult” and put all of these into separate chapters? Because I think I need to carry all of this information around with me.
I was actually just chatting with my fiance about how high his insurance was, and his only reasoning was “well, I haven’t called them yet”. Well, how convenient. Comparison is so important not only for car insurance, but for every type of insurance. It just takes some work, and research.
Great post as usual.
Bahahahaha you don’t even know how much I joke about writing like, the How Not To Adult Handbook and giving it to people as a sort of joke birthday present, while not even really joking about it. At the very least, it is for sure going to be a regular feature on the blog, because my god have I ever Learned Some Things.
From doing them wrong.
Also, it turns out that my aunt makes my cousins watch my Youtube videos so it might actually be a way for me to impart real wisdom onto the future generations? That would be good. They can go forth and be financially responsible from day one.
Oh man, I totally did the same thing when I first bought my car… and last year I was really lazy with my home insurance and just renewed it… but there is more to that story… anyway, I have research insurance on my to do list for this month, since my home insurance renewal is due at the end of the month…
Wooo, research! I mean, is it fun in and of itself? Enh. Is the thought of saving buckets of money every month fun? Yes. That’s what I like to focus on to make myself follow through with the next steps, now that I’ve done the research – like actually asking for a lower rate. I feel just about as queasy about that as I do about asking for a raise, lol.
We here in beautiful BC take all the work out by using a socialist style system and being required to get insurance through ICBC (Crown corp? not sure). We just pick deductibles and levels of insurance, but all basic MUST go through them and their prices. I believe it reduces the insurance of certain groups, but definitely doesn’t allow for a huge savings for the drivers with spotless records.
Really wish I could get the option to shop around for lower prices.
That’s tough – I had heard some things about this, but to be honest all of my friends who live in BC live in Vancouver and they’re all like “lol no I don’t have a car I live in a hovel and have no money.” So none of them have been able to really fill me in on what car insurance situations are like out there. (Out of pure nosy interest, do you happen to know the range for an average person around our age? I’m so curious as to whether the socialist system out there makes it cheaper than my “free market competitive rates” here in Ontario. Feel free to email me at [email protected] if you don’t want to post it publicly – I won’t share it either, I’m literally just nosy.)
I live in Vancouver and I refuse to license up and fix my hand me down car because I can’t justify paying insurance lol, but I do know that for the last couple years, the two cars actually used in my house ( we have too many cars I think) were around 160 each. That’s taking into account my brother getting into a couple accidents, and my moms spotless record for years and years.
They did go down this year, but I’m not 100% sure which factors were in play for that.
Either way, I can’t justify paying that much every month when I can buy a bus pass that will take me everywhere for less. You’re just paying for convenience really because despite the complaints, Vancouver actually does have a decent transit system.
Oof, that IS a lot! And when I lived downtown, I felt the same way for sure. Ottawa, despite everything, has a good transit system as long as you fit its intended use cases (i.e. getting around in the core, or commuting into the core from the suburbs during rush hour!)
One of the biggest things when I looked at car ownership and insurance was the double whammy of a bus pas AND insurance. Given my monthly budget it only made sense for me to have one or the other – which is why I was able to abstain from a car for so long! (And also why I found a job in the suburbs as soon as I moved out here, haha.)
Ugh how I wish there were car insurance provider options in BC 🙁
I just wanted to point out, you keep making references to car ownership in ‘Canada’, costs actually vary significantly from province to province. I know insurance in Alberta for me, was less than half of what I paid in Ontario, from the same company no less. Check this out: http://driving.ca/auto-news/news/whats-the-most-expensive-province-to-own-a-car-in
That’s an awesome point, and one I actually don’t have much – OK, any! – experience in, being a forever-Ontario-dweller. Thanks so much for adding that to the conversation, and for sharing the link – I’ll make sure to incorporate that info into future posts, and I know it’ll be helpful for people who read this!
It’s great to know how to buy car insurance. My wife and I need to buy a policy, so we’ll take your advice and research for the best rate available. Heaven knows we don’t have a ton of money to spare!