Can I negotiate a better car insurance rate?

I’ve been with the same insurance company for years, and I’ve generally been happy with them – even though the rates for my SUV keep going up. A work colleague insists that I should be trying to negotiate a better rate, like you sometimes can with a cellphone plan. He says that if I show them some cheaper quotes from other insurance companies, they will match those prices – or at least come close – just to keep my business. Is he right? I don’t really want the hassle of switching insurance companies. – Alison, Toronto

In Canada, companies can’t play Let’s Make a Deal with your car insurance.

“There’s zero wiggle room,” Adam Mitchell, chief executive officer of Mitch, a Whitby, Ont.-based insurance broker, said in an email. “It’s not a flea market where the best negotiator gets the best deal.”

Car insurance is regulated by the provinces. Each company must get its rates approved in advance by provincial regulators and generally “cannot deviate from those rates,” said Rob de Pruis, national director of consumer and industry relations with the Insurance Bureau of Canada.

“An insurance company has to specifically state, ‘this is what I want to charge’ [and] the regulator reviews it and has to approve it,” de Pruis said. “They can only charge within that specific parameter.”

Those approvals also include the exact discounts that a company offers.

That means you can’t negotiate a better rate to match a competitor’s price – or get a discount that your company doesn’t already offer.

But the upside “is that you can trust them to not screw around and see what they can get out of you,” Mitchell said.

Secret formula?

Most car insurance policies last for one year. When you start a new policy or renew your existing one, you get the rate that the company is charging that day. You keep that rate until you renew again for the next year.

Rates can vary widely between companies and each company weighs risk factors – including driving record, vehicle and postal code – differently, de Pruis said. They don’t share those calculations publicly.

“It’s like asking Coca-Cola for their formula,” de Pruis said. “They’re not going to tell you.”

But even if the regulator has approved increases or decreases to your company’s overall rates, that doesn’t mean that you’ll see those exact changes on your policy when you renew, Mitchell said.

If a company gets approved for a 0-per-cent increase, for instance, that could include some customers getting a significant increase and others getting a decrease, he said.

“Blending the numbers hides a lot,” Mitchell said.

Rate escape?

If you want to pay less but stay with the same company, you may have to lose some coverage – and raise your risk, Mitchell said.

For example, you could lower your liability coverage or get a higher deductible. Or, you could drop collision and comprehensive coverage, which are optional in most provinces.

But that could leave you on the hook to repair or replace your car if you’re at fault in a crash or if it’s stolen.

That doesn’t make sense for most drivers – and if your car is leased or financed, the bank usually requires the extra coverage.

Depending on the value of your car, you’d likely only be saving “tens to hundreds” of dollars a year, he said.

If you want to find out how much you could save, ask your broker or insurance company, de Pruis said.

They may also offer discounts that you’re not getting now. For instance, if they offer home insurance but yours is with another company, you might get a discount if you bundle.

Dare to compare?

Or you could shop around for a better rate for similar coverage and switch companies, de Pruis said.

“Remember to compare apples to apples,” de Pruis said. “Another company might offer a lower rate, but you might have a significantly higher deductible.“

Other companies may also offer discounts that your current company doesn’t. For instance, most offer a welcome bonus that turns into a loyalty discount – that can typically range from 5 to 10 per cent, depending on how long you stay, he said.

Many companies now also offer telematics – smartphone apps that track your driving – that could, depending on the company, bring discounts of up to 25 per cent for safe drivers but an added charge (typically, up to 5 per cent) for bad drivers, Mitchell said.

But if you do switch, it’s usually a good idea to wait until the end of your policy’s one-year term.

Companies charge a penalty if you cancel early, so you won’t get a full refund for the remaining months, de Pruis said.

Have a driving question? Send it to globedrive@globeandmail.com and put ‘Driving Concerns’ in your subject line. E-mails without the correct subject line may not be answered. Canada’s a big place, so let us know where you are so we can find the answer for your city and province.