- Helping you drive happy

Secrets of Car Insurance as Explained by CAA-Quebec

With the collaboration of Suzanne Michaud, Vice President, Insurance at CAA-Quebec

Here’s a question worth asking yourself if you’re currently shopping for car insurance: Do you really know how it works? Between submitting a request and agreeing to a contract, between the titles and the fine print, there is a host of information, clauses and industry practices that are well worth being revealed, understood and analyzed.

We previously debunked a number of myths and preconceived notions and even laid out 10 ways you can save on your car insurance policy. But as one of our goals at is to provide you with endless ways to make the right automotive decisions, we reveal here eight car-insurance secrets that agents and brokers don’t want you to know about. These are things you won’t hear come out of their mouths… unless you ask the right questions and ask them directly:

1. “Replacement value and replacement insurance are not equivalent.” 

Depending on our driving profile, one of these options may be less expensive than the other. Replacement value is additional protection that’s added to your car insurance. Its cost therefore takes into account the value of the vehicle, but also your claims history, the average number of kilometres driven annually, your credit score, etc. For its part, replacement insurance, offered by the dealership, is calculated essentially based on the value of the new vehicle you’re buying. It’s important as well to know that the method of making a claim is not the same in each case.

2. “I’m a broker, but I can’s shop everywhere.”

Insurance brokers do not actually have access to all insurance companies; in fact the number of insurers that work with brokers has greatly decreased in recent years. If for example you want to get a quote from Desjardins, La Capitale, SSQ or CAA-Quebec, you should request it yourself, because your broker doesn’t have access to those insurers.   

3. “Beware false declarations… you may be recorded.”  

The law obliges those seeking insurance to declare everything that could influence in a significant way the decision of an insurer. When you’re purchasing auto insurance, avoid making false statements or omitting certain facts that could increase your premiums. Otherwise you open yourself up to the cancellation of your contract or to a reduction in the compensation you receive when making a claim. Keep in mind that the majority of insurers record conversations with their clients; these recordings may be used in court to prove that a client has misled the insurer.

4. “When it comes to insurance, infidelity is a virtue.”

It’s simply not true that staying with one insurer is always your best option, particularly as it concerns your premium. Companies regularly modify their rates depending on claims made in the past, so take the time to verify rates just as regularly. Even if you’ve signed a two-year contract with a fixed premium, remember that you can always cancel the contract after one year without penalty. At the same time, many insurers try to avoid repeated departures and returns of clients – after all, the process of producing a new insurance policy is an expensive one – and will reward customers’ loyalty by offering discounts. Sometimes, then, at least some degree of loyalty has its benefits!

5. “I will consult your credit report.”

You best asset for reducing your insurance premiums is your credit report. If your credit score is very high, you will have access not only to better premiums but also to the best interest rates for your loan. A number of websites will obtain your credit report for you without cost. You can improve your credit score by paying all your bills on time, including your monthly cell phone, electricity and credit card bills.

6. “I don’t like complicated cases.”

Many insurers will refuse applicants if they have made multiple claims or committed criminal infractions, made false claims to an insurer in the past or even forgotten to pay their premiums on several occasions. For a standard-risk insurer, these applicants represent a non-standard risk. If this is your situation, contact a broker who will shop around with insurers who are specialized in non-standard risks. Of course, you should expect to pay a higher premium, and possibly obtain less-comprehensive coverage.

7. “I am practicing discrimination when insuring you.”

Your car insurance premium is higher than that of your neighbour or friend, even though they drive a similar car? That’s only natural. By definition, insurance is discriminatory, in the sense that it is based in part on personal factors. Young drivers generally pay more for insurance than experienced drivers, clients who have made several claims will pay more than those with no claims, and those who drive a lot of kilometres per year with their vehicle are penalized in comparison with those who drive less.

8. “Don’t make any claims for less than $1,000.”

Keep in mind that insurance aims to protect your financial situation in the event of a major problem. You have every right not to make a claim for damage to your vehicle; in fact, you probably shouldn’t if the cost of repair is less than $1,000. Why? Because after you make a claim, you insurer may increase your premiums for five or six years. If you add up the extra amounts together with the deductible (typically between $200 and $500), you’ll see that often it’s just not financially advantageous. By all means, don’t hesitate to discuss that with your insurer.