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).
Anyone have data on how much an avg Ontario driver would need to increase their deductible to see a 15% reduction in rates? $500? $2k?
— Kevin O'Donnell (@ODonnell_K) February 5, 2013
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.
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.