How is Your Car Insurance Premium Calculated?
Find out exactly what goes into calculating your car insurance premium.
What doesn’t affect your car insurance premium
- Your credit history, including past bankruptcies
- Your employment status
- How long you’ve been at your current address
- Whether you lease or own your car
- Accidents where you were not at fault
- Periods where you did not have car insurance (depending on your province)
- The colour of your car — we don’t even ask
What does affect your car insurance premium
- Type of vehicle
- Age, gender and years of driving experience
- Typical distance driven each year
- Driving history and previous at-fault collisions
- Postal code
- The coverage options you choose
- The deductible you choose
- Number of drivers on the policy
The type of car you drive impacts your premium, from its safety rating to its repair/replacement costs. Insurance companies also look at the statistics for that make and model, including the likelihood it will be involved in a collision or stolen.
Your age and gender
It varies by province but if you live in Ontario, Alberta or Quebec, insurers can take your age and gender into account. Experienced drivers have lower premiums since they are less likely to be involved in a collision. Female drivers may get a break for the same reason. Recent Ontario statistics showed that 77% of fatal collisions involved male drivers vs. just 21% with female drivers (2% were unknown).
How much you drive
Your annual kilometres will be assessed. The shorter your daily commute the lower your premium should be since driving less means less chance of having a collision.
Your driving history
Convictions due to driving infractions, at-fault accidents, speeding tickets and the number of years you’ve been driving are all considered. Parking tickets are not.
Your postal code
Rates can vary from one neighbourhood to the next based on past claims in that area. While urban centres tend to have higher rates than rural ones (more traffic means more collisions), in the country you may drive longer distances, which could push premiums up.
The coverage you choose
Certain coverage is mandatory, but not all. Optional coverage like comprehensive and collision insurance will increase premiums. You may decide it’s not worth having collision insurance on an old car that isn’t worth fixing.
You can also choose your deductible — the amount you pay out of pocket after an incident and before your insurance kicks in. A lower deductible means a higher monthly rate, a higher deductible means a lower rate.
Drivers in your home
If you live with other drivers who don’t have their own insurance — a child or a senior parent — you’ll likely include them on your policy, which will impact your rate. Note that adding a young driver will cost more than adding an older experienced one.
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Ways to lower your car insurance premium
Insurance companies tend to give significant discounts if you insure both your home and car with them. This is often referred to as bundling and can save you more than 15%. With Onlia, you can get up to 15% off car, and 20% off your home insurance.
You can reduce your rates even if you don’t own a home. Onlia’s discounts, for example, include:
• Insure more than one vehicle = 20% savings per vehicle
• No convictions for three years = 20% savings
• Winter tires = 2% savings
• New car = 10% savings
• Retiree with a good driving record = 5% off accident benefit coverage
• New driver with a G2 licence and good insurance history = 10% savings in first year
• Loyalty bonus (with company for more than a year) = 2.5% savings
Save as your situation changes
You’re suddenly working from home and driving less, or you’re off to the south of France for six months and won’t be driving at all. You can call your insurance company and see if they’ll reduce your monthly premium. With Onlia, you can do it yourself online.
Save now, pay later
If you absolutely need to reduce your monthly payments after your policy is in place, you can increase your deductible. But the flip side is paying more out of pocket if you need to make a claim.
Finally, save by shopping around
You wouldn’t hire a contractor without getting a few quotes — apply the same logic to finding an insurance provider. Whether it’s over the phone, at a brick-and-mortar office or by spending a few minutes getting a quote online, it’s worth the effort to know you’ve found the best coverage for the best price. Just make sure you’re comparing apples to apples since there are so many variables when putting together the right package for your needs.