There are many factors that determine your car insurance rate: some that are in your control, and some that aren’t. Since you’re required to buy insurance, it’s in your best interest to understand how your premium is calculated, so you can manage the things that are in your control and, hopefully, lower your rate. So, what’s determining your car insurance rate?
The make and model of your car
Insurers don’t care about the colour of your car – despite the popular myth that red cars are more expensive to insure. They do care, however, about the make and model of your vehicle for a few reasons. First, some cars have a higher safety rating than others, which will help to lower your premium. On the other hand, cars that are known to be stolen more often will raise your rate. In addition, if the cost of parts, repairs or replacement of your car is high, your insurance premium will also be higher.
Your insurance company will take into account your age, gender, where you live, and even your marital status when determining your insurance rate. Based on your demographics, your insurer will use statistics from drivers that match your history to determine the risk associated with insuring you. For example, Transport Canada reports that drivers between the ages of 16 and 24 are at higher risk for being killed in a collision than all other age groups – so they’ll obviously be pricier to insure. When it comes to where you live affecting the cost of your insurance, Ontario drivers will see a higher insurance premium than drivers in other parts of the country based on the fact that the province also experiences higher rates of insurance fraud.
Your driving record
One of the most important factors affecting your insurance rate is your personal driving history. The more traffic offences you’ve been convicted of, the riskier you’ll seem to your insurer – and the higher your premium. For example, a few speeding tickets can double your rate. Or, if you live in B.C., two distracted driving convictions in three years could add $2000 to your premium. And convictions for major offences, such as driving under the influence, could make it hard for you to buy any insurance coverage through a traditional insurer.
You can’t change your demographics, your past driving history, or your vehicle of choice (at least, not until it’s time to buy something new), but you can change your insurer. Different insurers will offer different prices and plans – even to the same driver and car. This means that one of the easiest ways you can lower your insurance rate right now is to shop around for the best plan available. Next time you’re looking for an insurance quote, you can quickly and easily compare options online. This isn’t a one time deal – you should review plans and prices each year before renewing your policy, since insurers regularly change their rates.
Now that you know a little bit more about what’s affecting your insurance rate, you can start making changes that will hopefully result in a lower premium. Right now you can look for a new insurer and start practicing better driving habits. Down the road, consider how the next car you buy will affect your insurance rates. And unless you’re willing to get married or change provinces for a lower premium, just accept that some things – like your demographics – are out of your control.