WINTER WONDERLAND

We have all that you need to know about the new snow-tire discount,

A very small piece of Ontario’s efforts to drive down the cost of car insurance is a new requirement that insurers offer a discount for snow tires by this coming Jan. 1.

When I say small, I mean it. If you buy new tires, the payoff is seven to 10 years away, and by then the car may be long gone.

So should you bother? I’d say so. This is really about safety, not insurance, despite how the Ontario Liberals have cast the move.

For anyone commuting in and out of Toronto and its freeze-thaw weather, winter tires are a must. I’ve had them for a decade and wouldn’t go back. The road grip and handling are far better than on our second car, which has all-season radials.

The discount is likely to be about 5 per cent of the cost of a policy. Since the average GTA car costs $1,600 to insure, according to the Insurance Bureau of Canada, you may save $80 per car per year with winter tires.

The cheapest winter tire sold by my garage is $135 plus tax, or $610 for four. You can, of course, get cheaper or more expensive ones depending on where you shop. But in this example, the break-even point is 7.6 years.

What the Ontario initiative illustrates very clearly is the importance of shopping around. There are more than 50 companies offering car insurance in this province and their discounts vary based on their claims experience. Some already offer the winter-tire discount. Some won’t tell you it’s available unless you ask. Going online to compare prices is easy.

So here’s what you need to know: When can I get the discount? All Ontario insurers must offer something by Jan. 1, 2016. But provincial finance minister Charles Sousa’s office says 45 per cent of them already do so. I’m renewing before Jan. 1. Can I still get the discount? Not unless your company already offers one.

My policy with TD Insurance Meloche Monnex (Security National) renews in two weeks. An agent told me over the phone last week the discount is not available until January, but did not know how much it will be.

He advised me to call back then and ask for a policy adjustment. Crystal Jongeward, a spokesperson for TD Insurance, says the discount could be up to 5 per cent. How much is the discount? It will vary, but will come in at between 3 and 5 per cent. The province requires something be done by each province, but doesn’t set a number. Compliance will be monitored by the Financial Services Commission of Ontario, the provincial regulator.

As always, pay attention to the fine print. The discounts will likely not apply to the entire policy, just part of it. For example, Aviva Insurance has offered winter-tire discounts since March, 2014, says spokesman Glenn Cooper. For Aviva, safer driving means fewer accidents, fewer claims, higher profits and lower prices for its customers.

Aviva’s discount is 5 per cent of the collision portion of the policy, which is about 90 per cent of the total cost. So 4.5 per cent is the overall reduction. TD Insurance is calculating its reduction the same way.

The discount is also made per car. So if one of yours has snow tires and the other doesn’t, cut the discount in half. What proof will I need? Your declaration is enough. But should you get into an accident and the tires aren’t there, watch out. Keep a copy of the receipt and call your insurer when the tires are put on. I have all-season radials. Do they qualify? No. Must the snow tires be new? No. How many tires must I have? Four. When do the tires have to be on the car? That depends.

TD’s Jongeward says the tires must be in place between Dec. 1 to March 31 for their policy.

Aviva’s Cooper says to have them on from November through April.

The Ontario Liberals are trying to cast the winter tire initiative as part of their pledge to reduce car insurance, seeking to show progress on their stalled promise.

It’s still a good idea, but their real focus should be on substantive ways to reduce the most expensive auto insurance in Canada.

Two and a half years after their pledge to reduce rates by 15 per cent, they’re less than halfway there.

The real energy should be aimed at eliminating fraud, keeping insurance companies in line, ensuring reasonable compensation to accident victims and keeping lawyers from driving up settlement costs every step of the way.

In the meantime, let it snow. Adam Mayers writes about investing and personal finance on Tuesdays and Thursdays. Have a question? Reach him at amayers@thestar.ca.