Car Insurance Rates


Your auto insurance premiums are determined by a number of factors, some of which may seem unrelated to the way you drive your vehicle. Insurers use a complex formula that takes these factors into account. Each is assigned a weight based on its usefulness in predicting insurance loss. Any change might result in an increase or decrease in your rates.

Below, we’ll provide a summary of the elements that have the largest influence on the amount you pay for auto insurance. It’s important to underscore that every insurer weighs the following items differently. For this reason, rates are likely to vary from one company to the next for the same coverages.

Your Driving Record

Many insurers consider your driving record to be the most important factor of all. They use it as a gauge to evaluate the likelihood that you will submit claims in the future. Your record will include tickets, convictions, and accidents, all of which imply something about your behavior and decision-making behind the wheel.

If you have a clean driving history, you’ll enjoy lower premiums. On the other hand, if your record contains tickets and traffic violations, expect higher premiums. If you have not had coverage for several years, your insurer will likely assume the worst.

Your Age And Gender

Older drivers tend to drive more defensively than younger drivers, and make better decisions behind the wheel. This means they usually represent a lower risk of insurance loss. This is the reason rates are often lower for adults than for teen motorists.

Data has traditionally shown that women are safer on the road and more likely to drive defensively than men. Because they pose a lower risk to insurers (other factors remaining the same), they enjoy lower premiums. To be sure, both genders make mistakes, and practice unsafe driving habits. But the data suggest men do so more often.

Your Vehicle

The make, model, and year of your vehicle are also important to determining your rates. Most insurance companies in Canada use the Canadian Loss Experience Automobile Rating (CLEAR) system to gauge the risk of insurance loss for any given vehicle. A car’s CLEAR rating reflects the frequency and cost of past claims associated with that particular make, model, and year.

Your insurer will use the rating, along with your car’s market value, to help determine your premiums. Thus, it’s a good idea to investigate a vehicle’s safety features, cost of repairs, and appeal to thieves before purchasing it.

Your Average Annual Miles Driven

The fewer miles you drive, the lower the likelihood you will be involved in an incident that generates a claim. This translates into a lower risk for your insurance company, and lower premiums for you. For example, if you drive 5,000 miles a year, you’ll pay less for coverage than someone who drives 15,000 miles a year (again, other factors remaining the same).

Your Home’s Address

Where you live plays an important role in helping your insurer determine the risk of insurance loss you represent. The reason? Because some areas pose more costly or more frequent claims than others.

For instance, large cities tend to see more auto theft and accidents than smaller cities. They also pose higher medical care costs. As a result, those who live in larger cities are more likely to submit claims. Moreover, when they do so, the claims are likely to be more expensive than elsewhere.

Your Credit History

Credit-based insurance scoring is used by many insurance companies to evaluate the chance that a policyholder will submit claims down the road. The scoring is also useful for predicting the relative cost of those claims. It takes into account numerous facets of a policyholder’s credit history, including bankruptcies, level of debt, and reports of late payments to creditors. The higher a person’s insurance score, the lower the risk they represent to the insurer.

Your Coverages And Deductibles

The types of coverages you carry, along with their respective limits, will have a major effect on your premiums. Certain optional coverages, such as comprehensive and collision, are expensive. Dropping them will lower your rates.

Your deductibles also play a role. The higher they are, the lower your rates will be since you are responsible for paying more money out of your pocket before your coverage takes effect.

Although there are other factors involved with calculating your auto insurance rates, those described above are among the most important. As noted earlier, each insurer handles them differently. When the time comes to renew your policy, shop around. Take a few minutes to compare quotes from several insurers in order to find the best package.

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