Consider dropping these car insurance coverages if you’re not driving during COVID-19

This story has been updated from a previous version.

With most Canadians practicing self-isolation by staying indoors during the second wave of the pandemic, there has been a significant decrease in the number of cars on the roads.

As we stay home in a bid to flatten the curve again and step out only when it’s an utmost necessity, it’s safe to assume that most of us will be driving our cars less frequently in the next few weeks or even months. You could save money on your car insurance by dropping a few coverages that you might not need during self-isolation.

Before we discuss what to keep and what to remove from your car insurance coverage, we need to first review what kind of coverages are a part of basic car insurance. 

What does basic car insurance coverage include? 

Basic or standard car insurance is the mandatory coverage that you need to have to drive a car in a particular province. In the province of Ontario, basic car insurance has to provide the following coverage: 

Third-party Liability Insurance

This mandatory coverage safeguards you against lawsuits for physical injuries to a third party, as well as property damages caused while driving. The province of Ontario requires you to carry at least $200,000 in third-party liability insurance coverage, but most drivers choose coverage close to $1 million.  

Statutory Accident Benefits Coverage

This basic car insurance coverage pays for the treatment of physical injuries to the driver, irrespective of who caused the accident. It also covers supplementary medical, rehabilitation and attendant care, and non-earner and income replacement benefits. 

Direct Compensation Property Damage Coverage

This covers damages to the car and the property inside the car when the accident is caused by the other driver. To get the benefits of this coverage, the other driver must also be insured. 

Uninsured Driver Coverage

This coverage pays for the physical injury to you and your family caused by an uninsured driver or a hit-and-run driver.  

Additional coverages

Apart from the basic insurance coverage, there is a plethora of additional coverages for drivers to choose from. During these unprecedented times, one must be able to differentiate essential coverages from non-essential ones. 

Collision Coverage

This covers the damage to your car in case of a collision with another object, such as buildings, trees, or other cars, regardless of who caused the accident. It also covers losses incurred when your car rolls over. You can consider dropping collision coverage only if you are a very safe driver with no collision history, or if you have decided not to touch your car until the pandemic is under control.

Comprehensive Coverage

This is an optional coverage that protects your car in case of theft, fire, vandalism, falling objects, natural calamities, or any damages while parked. In short, it protects your car when it's not in use.

In order to find out how dropping collision and comprehensive coverages affect car insurance premiums, we ran some test quotes on our auto insurance quoter. If you live in downtown Toronto, dropping the collision coverage can save you up to $45 per month. And dropping comprehensive coverage can save you up to $21 per month. 

Downtown Toronto:

*Lowest rate with collision coverage = $187/month 
*Lowest rate without collision coverage = $142/month 

Downtown Toronto:

*Lowest rate with comprehensive coverage = $163/month 
*Lowest rate without comprehensive coverage = $142/month 

Bottom line: Drop collision coverage only if you are a very safe driver or if you will not be using your car at all for a few months. We strongly recommend not dropping comprehensive coverage, especially if you park your car on the street. 

All Perils Coverage

Most drivers opt for this coverage, which is a combination of comprehensive and collision coverage. If you are a safe driver and are not going to drive your car often, then you could think of dropping collision coverage. It is not advisable to drop the All Perils Coverage, but you can downgrade it to comprehensive coverage. If you still wish to remove this coverage, you will save close to $73 per month.  

Downtown Toronto:

*Lowest rate with collision and comprehensive coverage = $215/month 
*Lowest rate without collision and comprehensive coverage = $142/month 

Bottom line: Downgrade it to comprehensive coverage if you are going to drive less frequently.  

Transportation Replacement

This coverage pays for cabs, rental cars, and other modes of transport if your car is under repair due to a damage that was insured. You don't need this coverage if you are under self-isolation and are not likely to drive often. 

Bottom line: This coverage can be removed from car insurance. 

Rental Car Insurance

This coverage protects you from damages to rented or leased vehicles. You don't need this coverage if you plan to stay at home. Plus, it’s not safe for your health to rent a car during the coronavirus outbreak, anyway.

Bottom line: This coverage can be removed from car insurance. 

Family Protection Coverage

This covers the losses due to physical injuries to your family members when an accident is caused by a third-party driver who is either underinsured or not insured at all. During these days of self-isolation, it is not advisable for families to go out together. Even in cases of emergency shopping, only the primary driver/insurance holder should use the vehicle. In this case, family protection coverage can be discarded.

Bottom line: This coverage can be removed from car insurance. 

Depreciation Insurance

This prevents the insurance company from deducting your vehicle’s depreciation value while settling claims. Considering how fast the car's value depreciates, it makes sense to carry on with this coverage if your car is new.  

Bottom line: Keep it if you own a new car.  

Apart from removing any of these additional coverages, you can reduce the value of your basic car insurance coverage. For example, if you are carrying third-party liability insurance of $1 million, consider reducing it to $500,000.

How to remove coverages

If you’ve decided to drop some coverages that you feel are non-essential at the moment, you should contact your insurance provider and request the removal of these coverages. To get a better deal in the reduction of premiums, you could shop around and compare quotes for basic car insurance coverage from other companies. This will give you the power to negotiate a favorable deal with your existing insurance provider. 

Should I cancel my car insurance?

Even though you have the option to cancel your car insurance altogether in a bid to save money while you’re not using your car, we strongly advise against it. There are two major drawbacks to canceling your car insurance:

If you have to drive your car in case of an emergency, and get into an accident, you will have no insurance coverage on either the car or the driver. 

When you decide to buy car insurance again in the future, there will be a gap in your insurance history, which will lead to higher premiums. 

While we’re all looking for ways to save some cash in these financially challenging times, make sure to take a close look at your policy and plan your car insurance coverage according to your needs.

Methodology

Test Quote Parameters:

• 29-year-old male (DOB May. 5, 1990)
• Single, employed
• Living in downtown of 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 current insurance company for two years
• Drives 10km daily to and from work
• Drives 30,000 km in a year
• Policy to start ASAP (either April or May)
• No cancellations; no time without insurance coverage (clean driving record)