A common question we get from our clients is: how is my insurance premium calculated?

Insurers use a variety of information to determine what premium you pay for car insurance, but we can break it down into four general criteria:

  • Your vehicle
  • Driver information
  • Where you live
  • Your coverages

The Vehicle You Drive

The year, make, model and safety features of your vehicle all help determine the premium you pay because different vehicles represent different levels exposure. For example, a four door sedan is less likely to be stolen than a two door sedan. Also, vehicles with additional features such as anti-lock brakes are less likely to be involved in an accident than vehicles without anti-lock brakes.

Driver Information

Your age, gender, driver’s license level and driver history all matter because insurers use statistical data to determine the likely hood of an accident. Drivers are grouped based on same characteristics such as age, gender and driving record history. For example, a driver who has been driving for 10+ years with no accidents is statistically less likely to have a collision than a brand new driver holding only a G2 license.

Where You Live

If you’re in a densely populated area like Toronto, theft and collisions are much more likely to occur. This means potentially higher premiums for city dwellers versus those that live in the countryside.

Your Level of Coverage

Aside from the mandatory coverages such as basic accident benefits and third party liability, there are also a variety of optional coverages you can purchase to protect both you and your vehicle. These include the new increased optional accident benefits coverages as well as physical damage coverages for your car such as collision, comprehensive, specified perils, and all perils.

While some of these factors may be beyond your control, careful driving and staying collision and conviction-free are sure fire ways to keep your premium low.