Everyone one wants to be able to say they got a deal. We all want our dollar to go the extra mile for us so that we get more for less. And car insurance is the same in that regard. However, where auto insurance differs is that many times our actions can make a big difference in our insurance rates. Some things are easy to change or correct, while others are not so simple. The three biggest factors, which account for your car insurance premiums are: Where is the car used? What vehicle is being driven? Who’s driving? Let’s look at each.
Where is the Car Used?
Some parts of Ontario are more expensive to live. Compare home costs and property taxes between two different cities and you’ll see price variances which can sometimes be hugely different. Auto insurance also has territories where it is more expensive. If one lives in the Greater Toronto Area, Brampton, or Mississauga for instance, you will notice your rates might be a lot higher than Kitchener, Waterloo or London. Why can two different territories have such a big cost difference? There are a couple of major factors and these are:
More accidents – Some areas have far more claims because the population density means traffic is quite heavy. The GTA has these problems in spades. More cars can mean more claims which in turn means vehicle insurance is more costly.
Fraud – Some areas have more issues with fraud. From clinics pretending to treat those injured in car accidents or simply inflating bills for treatments to legitimate injuries to tow truck drivers hauling cars to storage lots and charging exorbitant amounts of money, fraud happens far too often. While these kinds of fraud can be found all over Ontario they are prevalent in the GTA.
While it is difficult to just up and move from one part of Ontario to another where you live does affect how much insurance you pay and not only in terms of car insurance, but also property insurance as well.
Related Read: Why your home costs more to rebuild than you paid for it
What Vehicle is Being Driven?
The type of vehicle you drive can have a tremendous impact on what you pay to insure it. Of course a $200,000 Ferrari will cost more to insure that a $30,000 Honda Civic, but when looking at similarly priced vehicles there can be a huge difference in insurance rates. Here are some factors to consider:
- How easily damaged is a car and how costly is it to repair? Some vehicles could have higher repair costs. For example a brand new model might not have used parts to draw from to repair. Brand new parts cost more. Or sometimes a certain car could have known deficiencies, which can make them more difficult to repair after an accident.
- Do you drive a sportier car or a regular sedan? The type of car you drive also impacts your insurance rates. When a car make and model are known to get in far more accidents than other cars that causes insurance companies to raise the rates for that car.
- The Thieves’ Choice. Some vehicles are easier to steal then others or are more likely targeted by thieves. This can also mean higher insurance rates, especially if you have theft coverage on your vehicle.
- How safe is your car? This is perhaps the most important aspect of a car's insurance rating. The biggest cost in auto insurance is not the car itself, but injuries suffered in a car accident. So how likely you are to get hurt in an accident in your car goes a long way in calculating your insurance rates. A small two door coupe might not be as safe as a pickup truck, which might not be as safe as a seven seat SUV. Safety ratings play a huge role in insurance costs.
In general, with the cost to purchase being the same, cars that are safer and easier to repair are going to be cheaper to insure.
What’s the number one factor in how much you pay for car insurance? You. Getting traffic convictions (such as speeding or unsafe moves) affects your insurance because most insurance companies have conviction free discounts that can range anywhere from 5% to 20%. That means getting one ticket could result in up to a 20% increase on your premium! And of course at fault accidents can reduce your driving record from pristine to zero if you have two in a short period of time. A combination of too many convictions and accidents and you could see yourself placed with a more expensive insurance company altogether.
Here are some tips to reduce your car insurance premium:
- Drive safely – you are the master of your insurance rates.
- Package your home and car insurance with the same insurance company for multi-policy discounts.
- Increase your collision and comprehensive (fire, theft, vandalism etc) deductibles to lower your rates.
- If the value of your car is very low consider deleting physical damage coverage.
Want to know how to improve your driving? There are plenty of ways to track your driving through telematics. Now you can find out how fast you drive, how hard your break, how quickly you accelerate and corner. Usage based insurance is becoming more and more popular in Ontario. Contact your broker for more details.
Related Read: The Future of Insurance: Telematics
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Back to 2015 Summer ProvERB Insurance Bulletin.
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