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Getting a New Car? Here’s What You Need to Know About Insurance

Buying or leasing your first car is often about more than practical transportation; it’s a major rite of passage. You’ve got your own set of wheels — which means freedom! Convenience! Agency!

But with great power comes great responsibility — and the more serious considerations that come with taking on such a large expenditure. Think about it: Along with your shiny new ride, you’re going to want a financing plan, a way of budgeting for gas money, extra funds to put toward maintenance or parking expenses, and perhaps most importantly of all, auto insurance.

Auto insurance is hardly the sexiest part of investing in your first car, but in the hopes of guaranteeing you and your new whip a long and happy life together, it’s important that you select the right insurance plan for you — which can often entail hours on end of tedious research. Luckily for you, though, we’ve tapped Lesley-Anne Scorgie, spokesperson for Onlia, a digital home and auto insurance provider, founder of MeVest, and best-selling author of Rich by Thirty: A Young Adult’s Guide to Financial Success, to answer the most common questions you’re likely weighing when it comes to your own auto insurance.

I’m planning to purchase my first vehicle. What unexpected costs should I be thinking about?

“When spending on a car, people often overlook insurance and fuel costs as part of the overall price tag. So before you buy, take the time to call your preferred insurer or request a quote online.

“If you use a digital insurance calculator, you can go ahead and plug in some details about the make, model, and mileage of your chosen vehicle to find out how much an insurance plan will cost you on a monthly basis. Sometimes, it’ll turn out that insurance on a newer car costs less than on an older one. Often, electric vehicles can carry higher insurance costs than gas vehicles. Until you actually plug those details into the calculator online and get yourself a good quality quote, you really have no idea –– and those details may be worth considering before you make a final decision on which model you want to invest in.”

How can I cut my costs down?

“I usually recommend that folks find a safe-driving app that’ll help them assess their driving history and habits, so they can tailor their insurance plans accordingly. Apps like Onlia Sense™ (among others) are great because they use telematics to track your driving habits, then they offer discounts or rewards when you drive safely. Every dollar counts, and you may as well earn it back where you can.”

When it comes to buying vs. leasing, what are some things to take into consideration?

“Lease payments will usually cost far less than monthly payments on a purchased car, so if you’re looking to save money, leasing is an obvious choice. That said, if you’re planning on doing a lot of driving, you’ve certainly got to be mindful that exceeding the designated kilometer limit on your lease will land you with some big bills. If you signed off on driving 10,000 kilometers a year, then wound up driving 20,000, you’re going to pay for that.

“If you choose to buy, you’ll want to be absolutely sure that you can afford the payment — and on top of that, you’ll need to be sure that you don’t plan to trade in or upgrade your vehicle in the near future. In fact, you’ll typically need to drive your new car for about seven years for the purchase to really make financial sense. If you opt to buy a used car instead, those rules don’t typically apply since the original owner is the one paying off the new-car price inflation. But when buying used, you’ll want to be sure the model isn’t so old that it’s raising your insurance rates.”

What’s the benefit of “buying direct” vs. using a broker?

“Like with so many other industries, we’re seeing a recent push in the insurance world towards direct-to-consumer models. Buying ‘direct’ means that you’re going online to get a quote and buy. By going online, you’re empowered to make decisions on your own policy and coverages. But don’t worry, it’s still safe. Coverages that are mandatory in Ontario are automatically a part of a standard policy, so you won’t find yourself making any unforgivable mistakes.

“The other thing that I like about buying direct is that organizations like Onlia have direct digital portals to help you stay on top of your coverage — so you can actually manage your own insurance as your lifestyle or your budget shifts.”

How do I know if I’m choosing the right policy for me?

“You’ll know what you need when you start getting into the insurance process — each question you’ll have to answer while using an insurance calculator will address your driving habits and the ways in which you plan to make use of your vehicle. Take your time and look at who is giving you incentives to be with them. Going direct will make it a lot easier to understand if your needs are matching well with the policy.”

What are some mandatory coverages I should be well versed on?

“You’ll need to ensure that the actual date of your policy matches up with the date you plan to begin driving your new car, because it’s illegal to drive your vehicle sans car insurance. That’s one of those pieces that sometimes gets overlooked — so just make sure you have your coverage in place as a first priority.

“On a more granular level, your standard insurance package will come with a few types of basic coverage. You’ll get third-party liability coverage, which pays for damages incurred by someone not involved in the incident (let’s say, you run over a mailbox). There’s statutory accident benefits coverage – which covers your medical care if you get hurt in a collision. Then, there’s direct compensation, which will pay for necessary vehicle repairs after an accident. And last but not least, there’s uninsured automobile coverage, which exists to help cover costs if another driver involved in said incident doesn’t have insurance.

“On top of these basics, you’ll need to opt in personally to add any additional coverage. And depending on what kind of driver you are, your best options will shift. That said, broadly speaking, it’s recommended that you consider collision coverage, which covers the percentage of damages that you’re responsible for paying post-accident (depending on what percentage of the accident is technically your fault), as well as comprehensive car insurance, which is designed to help cover non-collision-related damage to your vehicle. If you’re the sort of person who seems to attract crises like, say, a golf ball through the windshield, this one is certainly worth considering.

What are some other ways I can save on my car insurance?

“Bundling together your home and your auto insurance can be a really great way to save. You don’t have to be a homeowner, though —– even as a tenant, you can put these two policies together, and that will save you anywhere from 15 to 20% on your total insurance for your home and auto needs. On top of that, being a notably safe driver will enable you to maximize on serious discounts (think: between $500 and $750). Tack on up to $40 cashback monthly in rewards and you could be saving even more.

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