Don't wait for the NDP - get a 15% discount on car insurance today

The NDP have called for a 15% reduction in car insurance. I have to admit it is very popular - and why wouldn't it be. Cutting people's bills is always popular for political parties. The difficulty with populist agendas is they frequently have no effect (e.g. regulating gasoline prices weekly), or have unexpected side effects (e.g. shifting wealth to the rich).

The NDP plan to cut car insurance rates falls into a third category: pointless. Anyone who wants to a 15% cut on insurance rates can simply increase their deductible. They will pay less per month, but it isn't free. Along with more money in their pocket they've taken on additional risk. It's a gamble - a gamble everyone is free to take.

I don't have comprehensive data to back up this claim, but I do have some quotes for a fictional 2010 Honda Accord LX. Using kanetix.ca I got quotes for the same car using the same driver profile. RBC, Desjardins, and The Co-Operators appeared in all the responses so I've used them.

I then tweaked the deductible amount for "comprehensive" and "collision" from $0 to $1,000. I haven't owned a car in years, so I can't remember what all that means - but my point rests on the fact that higher deductibles mean lower rates.

The highest cost policy has a zero deductible. Increase the collision deductible to $1,000 and rates drop by 14% to 21%. Increase comprehensive insurance to $1,000 and rates drop by 17% to 25%.

The online calculator didn't let me choose a $2,000 or higher deductible. It's fair to assume rates continue to drop (though not as quickly) as deductibles increase.

Back to my main point. If the NDP proposal was to force all policies to increase their deductibles by $1,000 in order to save drivers 15% on monthly fees, would everyone still think it's a good idea? Or would they feel it's nobody's business how much risk they want to take?

I'm comfortable leaving it to drivers to drive a hard bargain, shop around, and be informed about the insurance they are buying.

The NDP plan sounds nice, sings a nice song, but is ultimately pointless. If you want to save 15% on your car insurance, you already can.

You'll just have to risk it.