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AUTO KNOW: Ditch the old car to avoid high premiums

  • Cars in a parking lot

I’m a fixed income senior with a clean driving history. My 1986 Honda Civic, bought new, is 28 years old but in excellent shape.

My insurance rises each year. I compare rates, but am now reduced to one company, the Dominion, as the others decline because of my car’s age.

I only drive 20 kilometres per week (for church or groceries). My current premium is $1,412, up $200 from last year.

Do I have any recourse?

Pete Karageorgos of the Insurance Bureau of Canada replies:

These factors affect your automobile insurance:

  • Where you live: Collisions and theft are more likely in big cities, which may mean higher premiums.
  • The type of vehicle you drive: Some cars fare better in crashes than others, meaning passenger injury and vehicle damage end up being less severe. Also, newer, more expensive vehicles cost more to replace, so are more expensive to insure.
  • How you use your car: The more you drive, the higher the chance of a crash. So total annual kilometres and distance driven to work daily are factors.
  • Your driving record: A long, crash-free driving history helps keep your premiums down, while at-fault crashes and speeding tickets push your premiums up.
  • Your statistical group: Depending on which province you reside, your insurer may consider the claims history of your driving cohorts (grouped by age and geographic location, for example).
  • Other factors: Competition, regulations, taxes, discounts and unpredictable catastrophic events.

Insurers consider your individual history and that of your statistical group, so there’s no one-size-fits-all method of determining premiums. Therefore, not all 30-year-olds driving Fords and living in downtown Toronto, for example, will pay the same premium.

If the factors above weren’t considered, lower-risk policy holders would be subsidizing the higher-risk ones.

In the case of an older vehicle, age may be an issue because it lacks safety features included in new vehicles and, if this reader has comprehensive and collision coverage, finding replacement parts for a 28-year-old car may be difficult.

Check with your insurer that any applicable retiree discount has been applied.

Eric Lai adds:

Since you only drive about 1,000 kilometres annually, you might consider retiring your car and instead travel by bus, taxi, bicycle, e-bike (no insurance required) or walk.

Factoring in licence fees, insurance, gas and maintenance, you’re paying about $2,000 a year to drive those scant few kilometres. A major repair could double that figure.

Email your non-mechanical questions to Eric Lai at wheels@thestar.ca. Due to the volume of mail, personal replies cannot be provided.

  • AUTO KNOW: Ditch the old car to avoid high premiums
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