Does being unemployed affect car insurance?

Whether you're in between jobs, a stay-at-home parent, retired, or a student, if you're up for an expired car insurance renewal, you may have some questions regarding your coverage and whether your employment status or job title plays a role in calculating your car insurance rates.

Before renewing car insurance, stick around to learn more about factors considered by insurance providers when calculating premiums and whether being unemployed is one of them.

Does unemployment influence the cost of auto insurance?

While car insurance companies consider numerous factors when calculating auto insurance rates, your employment status is not one of them. Rest assured, retired people, young drivers in school full-time, and unemployed people can still buy insurance whenever they want without having to worry too much about their employment status.

Factors that will influence your car insurance premium

Now that you know your insurance company won't consider your employment status, you may have some questions regarding what factors are used to price insurance products. While many insurers have different rating scales, most of the time, car insurance companies will use the following to determine insurance premiums:

Age and driving experience

One of the most important factors that insurance providers will consider is your age and driving experience. Historically, younger, less experienced drivers are more likely to get into a car accident than those who have been behind the wheel for longer. Due to this high risk, a young driver can expect higher premiums than more experienced motorists.

Driving history

Another key factor is your driving and claims history. Those with numerous fines, infractions, and insurance claims on their record will also experience a higher premium than those who practice safe driving.

Essentially, the more claims you have on your history, the more money you'll cost your insurance company. To offset the likelihood of a claim, most insurers will increase your insurance premiums. On the other hand, having a clean driving record can help you get the most competitive rate possible with lower premiums for full coverage.

Where you live

Where you reside in Canada is also an essential factor that plays heavily into your premiums, given that the country has diverse city and rural landscapes. For example, if you live in a large city with lots of traffic and high crime rates, you're at more of a risk of filing an insurance claim for theft or car accidents than someone living in a quieter area.

Vehicle type

The make and model of your car is next. Expensive, luxury cars with aftermarket modifications can be deemed high risk compared to standard cars, which can lead to more expensive premiums at the end of the day.

Driving habits

Do you have longer commuting habits than the average driver? If so, you could be at risk of higher premiums compared to those who have a lower average annual mileage. Why, though? The way an insurance agency sees it, the more time you spend behind the wheel, the more likely you'll be in an accident. Because of this, if your job title or commute is longer, an insurance provider will price your coverage a bit higher than others.

Your coverage limits and deductible amount

Lastly, your coverage limits and deductible amount can also lead to an insurance premium increase. Opting for higher limits and optional coverage will cost you more money at the end of the day, given that you'll have additional protection in the event you need to file an insurance claim for damages or injuries in the future.

How to get cheap car insurance if you're an unemployed driver

The fact of the matter is, that employed and unemployed drivers alike are searching for ways to get cheaper car insurance. Lucky for you, BrokerLink is here to give you the ins and outs of how you can save money on your coverage with your insurance provider, below:

Compare car insurance quotes

If you live in a province or territory with a private insurance system, one of the best things you can do is shop around with different insurance companies and compare car insurance quotes. By comparing coverage and prices provided by insurance providers, you'll be able to find the cheapest car insurance available to you.

One thing we should note is that while it's ideal to save money on car insurance, going with the cheapest car insurance company isn't always the best move. The key is to save money without having to compromise on the level of coverage you receive. That way, you can drive confidently knowing that you'll be protected in the event you're involved in a collision.

Consider your driving habits

Think about your daily commute and driving habits. If you don't have that far to go and generally stay within your neighbourhood for most of the year, you likely have low mileage compared to other motorists. Because of this, you could potentially get a discount on your car insurance costs. Keep in mind that insurance companies may ask you to install an in-car device that monitors your annual mileage throughout the year to ensure you stay within your limits.

Think about your coverage options

As we mentioned, the car insurance policies you choose and your limits will play a role in your insurance costs. We recommend looking at your unique needs as a driver and choosing coverage that meets these needs. There's no need to pay for coverage you won't necessarily use.

Ask about discounts

Did you know there are numerous discounts available for drivers in Canada? Whether it be a no-claims discount, a discount for installing a security device on your car, having low annual mileage, or being a member of a professional organization, there are several ways you can save money with your car insurance provider--all you have to do is ask your insurance agent!

Increase your deductible

A deductible is a predetermined amount of money you'll need to pay at the time of an insurance claim before your insurance providers will cover the rest of the expenses. Premiums and deductibles are closely related in the sense that should you opt for a higher deductible, you can save money on coverage, as it takes more of the financial responsibility away from your provider.

Pay for your insurance upfront

Drivers who opt to make their insurance payments each month are charged an administration fee by providers, given that they will have to process your payments each month.

To avoid having to pay for these added fees, consider paying for your car insurance upfront. Not only will this save you the hassle of setting up automatic payments, but it will also save you some cash at the end of the day.

Can unemployed drivers deduct car insurance on Taxes?

No, unemployed drivers are not able to deduct a portion of their car insurance from their income tax during tax season. That said, if you are self-employed, are an army reservist, or a performing artist, there is a chance you could qualify for some sort of tax discount. If you are unsure about whether you qualify, we suggest reaching out to your insurance company or a tax specialist for more information.

Do students pay more for car insurance?

When it comes to student car insurance, there is a chance you may pay more for your premium than others, given the fact that you'll likely be under the age of 25 and less experienced than most motorists on the road. That being said, being a student is only one of the aspects insurance providers look at when calculating costs. In fact, other factors may play more of a role in your premiums than your status as a student. Therefore, if you're looking to find the most affordable option out there as a student, comparing quotes from different insurers is your best option. You may even be eligible for a student discount while you are studying.

Protect yourself behind the wheel with quality auto insurance

In Canada, all motorists must have some type of car insurance. However, depending on the province or territory you reside in, the minimum coverage required and the policies, for that matter, will vary. Regardless, here are the most common types of auto insurance purchased by drivers throughout the country:

Mandatory car insurance

Mandatory car insurance is crucial as it provides financial protection against accidents, covering costs related to injuries, damages, and liabilities. In the section below, we will explore the various types of mandatory car insurance and delve into the significance of having such coverage:

Third-party liability insurance

Third-party liability car insurance protects policyholders in the event they cause property damage or bodily injuries to a third party while operating a car. Should a claim be filed against you, liability coverage will cover the cost of repairs, replacements, medical bills, legal fees, and other costs associated with your lawsuit up to your coverage limit. While many provinces require drivers to purchase a minimum of $200,000 in coverage, most drivers opt for higher limits to ensure they are sufficiently protected.

Accident benefits coverage

Accident benefits coverage is another mandatory insurance policy for all provinces and territories except Newfoundland and Labrador. Accident benefits protect policyholders, their passengers, or pedestrians injured in a collision, regardless of who's at fault. This car insurance will cover the cost of medical bills, rehabilitation, lost wages, and other associated expenses.

Uninsured motorist coverage

With the exception of Alberta, uninsured automobile insurance is the final mandatory car insurance policy in Canada. This car insurance policy will protect you if you are involved in a collision with someone who is either uninsured or underinsured, ensuring you're fairly compensated for injuries and damages. The auto coverage also protects you if you are in a collision with a hit-and-run vehicle.

Optional car insurance

While not required by law, optional insurance policies, such as collision, comprehensive, and accident forgivness, provide an added layer of protection and peace of mind. These coverages can help cover the costs of repairs or replacement of your vehicle due to incidents like theft, vandalism, or natural disasters.In the section below, we will examine the types of optional car insurance and highlight the benefits they offer to drivers:

Comprehensive coverage

Comprehensive car coverage is an optional car insurance that you may want to consider. Essentially, a comprehensive policy will cover the cost of vehicle repairs that occur from non-collision events. Whether it be due to theft, vandalism, fire, or severe weather, with this coverage, you can rest assured knowing that you won't have to pay out of pocket for repairs or replacements. You will, however, need to pay a deductible before your insurance company will pay for the remaining costs.

Collision car insurance

Similar to comprehensive, collision car coverage will cover the cost of vehicle repairs and replacements your vehicle requires following a car accident. Again, you'll need to pay an out-of-pocket deductible before your insurance company kicks in to cover the rest of the expenses during your insurance claim.

Accident forgiveness

One final type of optional car insurance coverage popular among drivers is accident forgiveness. Accident forgiveness is additional coverage that can be added to your auto insurance policy as an endorsement, to protect your driving record and to help prevent your insurance premium from increasing if you have an at-fault accident claim.

Note: coverage varies by province.

Get affordable coverage with BrokerLink

At BrokerLink, our goal is to help customers get access to multiple auto insurance policies at an affordable price. With years of experience and locations across Canada, if you're looking for cheap car insurance that doesn't sacrifice your level of coverage, BrokerLink can help! We're also a resource hub for all types of car insurance topics and questions like what the best cars for students are and more!

BrokerLink is pleased to live and work in your neighbourhood! If we're nearby, don't hesitate to come into one of our locations to work with a broker from our team face-to-face. You can also reach us over the phone during business hours.

Alternatively, if you're just browsing and want to compare insurance costs before purchasing a new car insurance policy, you can use our free online quote tool from the comfort of your own home!

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