Most Canadians are driving a lot less in recent weeks as a result of the COVID-19 lockdown. What many don’t know, however, is that they may be overpaying for car insurance as a result of being on the road a lot less. 

There are two ways that drivers can save right now. First is from the rebates and discounts being rolled out by insurance companies themselves. Companies like Allstate Canada and Aviva have announced discount programs for customers and Canadians can expect more announcements in the coming weeks, according to Justin Thouin, CEO of LowestRates.ca. 

“Since the coronavirus pandemic is an unforeseen situation, I do expect that insurance companies will look to rebate or refund some premiums because drivers are using their cars less,” said Thouin.  

But consumers don’t have to wait for their insurance company to make an announcement. In fact, there are a couple of things you can do yourself to potentially reduce your premium if you’re driving less or not at all.

These actions break down into two categories.

1. Change Usage: A factor in determining the price you pay for insurance is how you use your vehicle. For most drivers, the less you use your car, the less you pay. There is an opportunity to save money if your usage has changed.

2. Reduce Coverage: If you’re not driving a vehicle at all, you have the ability to remove coverages to save money (and as you’ll see, the money saved here can be considerable). 

In the report below, we’ll break down what an average 29 year-old male driver was paying for car insurance in both Toronto and Montreal, and then how much they can potentially save from changing either how much they drive, or how they’re using their car.

It’s very important to note that if you are telling your insurance company that you’re driving less or not all, you have to inform them right away once that changes. You have to revert to enough coverage once you start driving regularly to ensure you’re covered in the case of a claim. 

Scenario one: Not driving your car to work anymore

Normal Scenario:

Most drivers use their cars to drive to work. Insurance companies call this kind of driving “commuting”. If you are using your vehicle to commute to work and for leisure purposes, then let’s assume:  

The number of kilometers driven to work or school one way (each day): 10 km
The number of kilometers driven every year: 30,000 km

Here are the lowest premiums for the above-mentioned parameters: 

Lowest premium in downtown Toronto = $217.50/month or $2,610/year

Lowest premium in downtown Montreal = $147/month or $1,762/year

COVID-19 Scenario: 

If you’re practising self-isolation, and are working from home, you wouldn’t be driving to work. And you are likely to drive only when you need to buy essentials or in case of an emergency. Insurance companies consider that kind of driving ‘personal use’. If you’re using your vehicle only for personal use, then let’s assume:  

Number of kilometers driven to work one way (each day): 0 km

Number of kilometers driven every year: 5,000 km

Here are the lowest premium for the above-mentioned parameters: 

Lowest premium in downtown Toronto: $184.50/month or $2,214/year

Savings: $33/month or $396/year 

The car insurance premium in the COVID-19 scenario is 15% less than the normal scenario.

Lowest premium in downtown Montreal: $94/month or $1,123/year

Savings: $53/month or $639/year 

The car insurance premium in the COVID-19 scenario is 36% less than the normal scenario.

Scenario two: No longer driving your car for business

According to insurance companies, a car can be used for commuting, “pleasure” or business purposes. Insurance premiums vary according to the usage of the car. Above, we looked at a driver removing commuting from their drive, and as a result, that driver saw substantial savings. But what if a driver is primarily using her car to drive for her job? Let’s check how no longer driving for your job affects your insurance rates.

Normal Scenario:

If your job requires you to drive around town a lot (salespeople, realtors, etc.) then your usage would be considered business use. Let’s assume: 

Number of kilometers driven to work one way (each day): 0 km
Number of kilometers driven for business each day: 80 km
Number of kilometers driven every year: 30,000 km

Here’s the lowest premium for the above-mentioned parameters: 

Lowest premium in downtown Toronto: $221/month or $2,656/year

Lowest premium in downtown Montreal: $163/month or $1,955/year

COVID-19 scenario: 

With many business owners shutting down temporarily, there’s a lot less business driving happening out there right now.

In this case, it might make sense for you to stay at home and switch from business usage to personal usage (driving to buy essentials or in case of emergencies). Let’s assume that you opt for personal use: 

Number of kilometers driven to work one way (each day): 0km
Number of kilometers driven every year: 5000 km

Here’s the lowest premium for the above-mentioned parameters: 

Lowest premium in downtown Toronto: $184.5/month or $2214/year

Savings: $36.5/month or $442/year

A car insurance premium in the COVID-19 scenario is 17% less than the normal scenario.

Lowest premium in downtown Montreal: $94/month or $1,123/year

Savings: $69/month or $832/year

A car insurance premium in the COVID-19 scenario is 43% less than the normal scenario.

Scenario three: Not driving your car at all

Normal Scenario: 

Most drivers opt for a number of insurance coverages to protect themselves and their vehicles, including liability, accident benefits coverage, collision and comprehensive coverage, to name a few.

If you’re driving regularly, these coverages make sense. We included all these coverages when pulling quotes for a regular driver who used her car for commuting and pleasure.

Lowest premium in downtown Toronto: $217.50/month or $2,610/year

Lowest premium in downtown Montreal: $147/month or $1,762/year

We also decided to pull quotes for a driver who uses their vehicle primarily for business purposes.

Lowest premium in downtown Toronto: $221/month or $2,656/year

Lowest premium in downtown Montreal: $163/month or $1,955/year

COVID-19 Scenario: 

If you are not driving at all for a prolonged period, it may make sense to drop some coverages that are not essential anymore. For instance, you may consider dropping or suspending liability, collision, and accident benefits coverage if you are not going to hit the road at all. Comprehensive coverage is one that is considered essential even if a car is kept in storage, as it can protect against things like a fire, theft or explosions.

It’s important to note that not all cars can have the above mentioned coverages dropped. For instance, if you’re leasing your car or financing it, you’ll need permission from the leasing or financing company to remove your coverages. They may not grant it.

Let’s assume that your car is not leased or financed, or that you’ve received permission to remove coverages. And you’ve decided to drop accident benefits, collision and liability, leaving only comprehensive to protect the vehicle while it’s parked. 

Here’s what you’re looking at paying. 

Lowest premium in downtown Toronto: $ 8.50/month or $100/year

If you had previously used your car for commuting and pleasure, the money saved by parking it comes out to: $209/month or $2,510/year

The car insurance premium in the COVID-19 scenario is 96% less than the normal scenario.

Lowest premium in downtown Montreal: $14.50/month or $173/year

If you had previously used your car for commuting and pleasure, the money saved by parking it comes out to: $132.5/month or $1,589/year

The car insurance premium in the COVID-19 scenario is 90% less than the normal scenario.

Lowest premium in downtown Toronto: $ 8.50/month or $100/year

If you had previously used your car for business, then the money saved by parking it comes out to: $212.50/month & $2,556/year 

The car insurance premium in the COVID-19 scenario is 96% less than the normal scenario.

Lowest premium in downtown Montreal: $14.50/month & $173/year

If you had previously used your car for business, then the money saved by parking it comes out to: $148.50/month & $1,782/year

The car insurance premium in the COVID-19 scenario is 91% less than the normal scenario.

Bottom Line:

Our test driver saved 15% on a monthly premium in downtown Toronto and 36% on a monthly premium in downtown Montreal when he stopped his daily commute to work. 

Our test driver saved 17% on a monthly premium in downtown Toronto and 43% on a monthly premium in downtown Montreal when he stopped using his car for business. 

Our test driver saved up to 96% on a monthly premium in downtown Toronto and 90% on a monthly premium in downtown Montreal when he stopped driving his car altogether. 

Before making changes to your car insurance coverage, we encourage you to talk to your insurance advisor and figure out what is right for you depending on your usage. 

Methodology:

Test quote parameters that were kept constant:

• 29-year-old male (DOB May. 5, 1990)
• Single, employed
• Living in the downtown of a major city
• Driving a 2018 Mazda CX-5 GS 4DR AWD (not leased)
• Purchased vehicle in March 2019
• Winter tires
• Street parking
• G licence (or provincial equivalent)
• Insured consistently since 2006
• With the current insurance company for two years
• Policy to start ASAP (April or May 2020)
• No cancellations; no time without insurance coverage (clean driving record)
• No discounts or credit checks were applied