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How Your Auto Insurance Rates Are Set In Ontario - GetInsuranceQuotes.ca

July 26, 2013

A series of factors goes into deciding an auto insurance rate. Primarily, they are as follows:

1. Personal Information

Personal information consists of several pieces of important information, comprised of the following:

The Type of Vehicle

This matters because most insurance companies keep a log of the cost it takes to repair a specific make and model according to their prior claims made on similar makes and models. The Insurance Bureau of Canada (IBC) has a page titled "How Cars Measure Up" which details the cost of most car models, available on the IBC website.

Driving Record

The overall price you pay for auto insurance is heavily dependent on your individual driving record, which includes the amount of accidents you have been in where you have been more than 25% at fault, as well as the length of time you have possessed a driver's license, and whether or not you have participated in a recognized vehicle operation course, as well as driving infractions.

Simply put, the cleaner your driver record, the lower the price you pay.

How Often You Drive

Your overall auto insurance cost is also dependent on how often you drive. Think of this way - the more time you spend in your car, the more chance you have of getting into an accident.

Location

Where you live helps dictate the cost of your car insurance. Auto insurance rates are typically higher in more populated areas, because of the higher chances of accidents and car theft.

Age

In general, younger drivers, particularly teenagers tend to have more accidents than mature drivers. Drivers over 25 tend to get lower insurance rates than young drivers. Read more about Car Insurance Discounts For Senior Drivers and Car Insurance For Young Drivers.

2. Amount and Types of Coverage

When buying insurance, most people purchase a plan that extends beyond the basic coverage plan, which inevitably drives up the cost of insurance. For instance, if you purchase an option feature such as Collision Coverage, which will secure you against any collisional damages, regardless of who is at fault, you will be better covered, but will pay a heftier sum.

If you're considering adding an additional feature to your coverage plan, it's a smart idea to discuss it with your car insurance broker first to make sure that the services will be worth having.

3. Deductibles

Another significant contributing factor to the overall cost you'll pay is the amount of a loss you will have to pay for. Deductibles vary based on the type of coverage you and the other party possess, as well as what percent at-fault you are found.

Most additional features for insurance come with a deductible, each one varying depending on the event that occurs. You can pay a lower premium by having a deductible on your DC-PD coverage, or increasing the deductible on the other coverages. This means that you pay more out-of-pocket when it comes to paying for damages and repair costs, and your insurance company pays less, resulting in a lower overall price for yourself.

Furthermore, if you operate an older automobile, you have the option of refusing Collision or Upset and Comprehensive Coverage. Each insurance company may have their own reasons for having higher or lower cost deductibles in addition to what you may expect.

4. Insurance Company

Although they all offer similar services, the prices for insurance premiums vary significantly from one insurance company to another. It's important to look at a variety of insurance companies before settling on one, because each company may charge a higher price for each service and deductible. It's a wise idea to figure out what premium and features you want, and then look for the best option for the services you want.

So why do prices vary so much? Insurance companies look at their members as a collective group, and they base their prices on the claims made by the entire group. If one insurance company has a group that is more prone to accidents than another insurance company, those costs will be significantly higher.

Additional Resources & Advice

Looking for more information on car insurance in Ontario? We've prepared some guides to help you:

Visit our Insurance Tips & Information Centre for more useful tips and guides on car insurance.