As you stare at the calendar and find the car insurance renewal date approaching, a familiar question comes back to haunt your mind: “Will I have to pay more premium this time?”
Did you ever take your time to sit back and consider the factors that determine your auto insurance premium? If you haven’t, it’s time to understand how insurance companies calculate insurance for vehicles. Most insurance companies factor in similar aspects while calculating your risk profile.
However, there’s a visible difference in terms of insurance premiums. This is due to their individual ways of perceiving your driving record, demographics, and risk profile. In this article, we will explain how to calculate car insurance and much more.
Consult reputed insurance brokers at https://www.surex.com/Insurance/auto-car/nova-scotia to get custom quotes for your policy.
How to Calculate Car Insurance Premiums in Canada
Top car insurers in Canada consider certain common parameters while determining the premiums. Broadly categorizing, these factors come under four segments.
- The candidate’s driving profile, including the demographics, location, insurance history, and driving habits
- The risk profile and corresponding protection coverage needed
- The deductible or the amount to be paid by the owner before the insurer settles the rest
- The approach of the car insurer to calculate risk
Impact of Driving Profile On Insurance Premiums
A driver’s personal profile is one of the most vital determinants of the premium. Insurers consider the following aspects while calculating your risk profile.
1. Age
Young drivers, particularly those aged under 25, are considered to be high-risk drivers. This is due to their limited driving experience and the aggressiveness of young drivers on the road. Statistical data reveals that drivers under 25 are more susceptible to accidents. Naturally, if you are a young driver, be ready to shell out higher premiums.
Once you reach 40, car insurance in Canada will be more affordable. Family persons with kids are considered to be safer drivers since they owe a responsibility to their dear ones.
2. Gender
If you are wondering how to calculate car insurance, make sure to factor in your gender. Insurance companies consider men to be riskier drivers compared to women. Statistical information reveals that male drivers are likely to commit offenses like speeding or driving recklessly. Naturally, women have a much safer driving profile compared to men.
3. Driving record
Your driving record goes a long way in determining your premiums. If you happen to be a safe driver who never received a speeding ticket, the good habit can save you premiums worth hundreds of dollars. On the other hand, careless drivers, having been involved in collisions or acquired demerit points, repent shelling out higher premiums.
Insurance companies scrutinize the driving record to determine the accidents where you were fully or partially at fault. They also factor in instances like impaired driving or speeding to assess your risk profile.
4. Demographics
Do you reside in a densely populated city? Does your locality witness a high number of car thefts or vandalism? In these conditions, you would be paying more premiums due to the susceptibility of your car. If your home is close to the downtown, insurance can be expensive. Naturally, auto insurance rates vary from one province in Canada to the next.
Also, whether you purchase your insurance through the government or private companies determines your premium. In provinces like Ontario, multiple private companies sell insurance policies. In British Columbia, the provincial government is responsible for insuring your car. Again, these provinces are among Canada’s most expensive places to purchase car insurance policies.
Impact of The Vehicle’s Trim, Production Year, And Model On Premiums
The production year, make, model and trim of your vehicle have a significant bearing on the premiums. For instance, luxury cars and sports vehicles invite high insurance costs compared to small cars or sedans. This is due to the high probability of luxury cars getting involved in collisions and the more significant replacement costs of components in a luxury car.
The Insurance Bureau of Canada evaluates the risk profile of different cars. With relevant insights from historical records, they draw the risk profile based on the number of claims, repairs, stolen cars, and vehicle repair expenses. Based on this information, insurance companies evaluate the probability of a car owner filing a claim.
How Does Your Driving Pattern Influence Your Premiums?
While discussing how to calculate insurance for a car, it pays to factor in your driving pattern or habits. Do you spend a lot of time on long drives? What is the distance between your home and workplace? On average, how long do you drive for pleasure and business purposes?
The longer you spend on the road, the higher would be your probability of landing in an accident. The same applies if you indulge in long drives too often. Car insurers consider your driving habits while calculating the premiums.
How Does Your Coverage Amount Decide Your Premiums?
Insurers also factor in the provincial mandates governing the minimum coverage amount while deciding your premium. For instance, the minimum third-party liability coverage in Ontario is $200,000. However, this is just $50,000 in Quebec. These differences in provincial insurance requirements sum up to define the premiums.
Even when you consider the optional coverages, each province or area presents a different risk profile. For instance, some areas are more susceptible to flood damage, for which you may need an add-on. Again, citizens in Alberta mostly own high-value cars. This pushes up the average premium you need to shell out in this province.
Calculate Insurance for Your Car — Endnote
Now that we have explained how to calculate car insurance, owners should understand their responsibilities. While some factors, like provincial mandates, are not under your control, you can try and reduce your premiums by cultivating responsible driving habits.
If you are worried about increasing car premiums, make sure to approach an online insurance brokerage for curtailing insurance costs. Professionals in the competitive insurance industry can help you compare quotes and qualify for discounts. They can also recommend the most cost-effective policies with maximum coverage for your benefit.
