How Your Auto Insurance Premium Is Calculated

How Your Auto Insurance Premium Is Calculated

Before now,  i posted an article explaining why insurance rates are so high in Toronto. It didn’t dawn on me until yesterday that I have never explained to our readers how your auto insurance premium is calculated in Ontario. Surprisingly it seems that many drivers are still unaware why their insurance goes up with newer cars, or goes down when you turn 25.

How Your Auto Insurance Premium is Calculated

  1. Age:

Age should come as no surprise to you. The younger you are the more you will pay for auto insurance. What you might not have known is that this also applies to senior drivers as well. Some insurance companies will actually increase drivers rates once they hit 65.

  1. Sex:

Once again, no surprise here. Statistically men are more reckless when they drive. This isn’t made up, this is a fact. So no more complaining because your paying more for insurance than your girlfriend is.

  1. Postal Code:

Your probably surprised to learn that your postal code will affect your auto insurance rate. Truth is that having the wrong postal code can have a HUGE impact on your auto insurance premium. The worst part about it is that there is nothing you can do to change it except move.

  1. Vehicle:

Your vehicle is rated for three separate indicators by insurance company. How safe it is, how much it costs to fix and how often is your vehicle type stolen. Drivers often assume that buying a smaller vehicle will lower their insurance but are surprised when it increases it. Generally speaking the smaller your vehicle, the less safe it is.

  1. Driving Record:

Have you ever heard the saying “Speed Kills”? Well its no joke. 25% of all fatalities from car accidents involve speeding. Things like speeding tickets, careless driving and use a handheld device will kill your insurance premium. And not in a good way.

  1. Years Insured:

It is against the law in Canada to drive a vehicle that isn’t insured. That’s why some insurance companies consider your years insured as important as your years licensed. Because after all if your not insured, your not driving.

  1. Payment History:

Insurance is a business and like all businesses they want to be paid for serviced rendered. That’s why having a spotty payment history will affect your insurance premiums.

  1. Claim History:

A drivers claim history is one of the most important factors when determining auto insurance rates. Insurance companies look at at fault accidents, not at-fault accidents and comprehensive claims as an indicator of future claims. Drivers can expect to pay a significant increase in premium for any at fault accidents. Drivers many also see changes in their premium or coverage for having too many not at fault accidents or comprehensive claims.

  1. Vehicle Use:

The more kilometers a vehicle is driven annually, the higher the premium will be.


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