How Not to Buy Car Insurance: A True Story

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.)