When it comes to determining the price for car insurance, there are many considerations. Here is a look under the hood at what impacts the insurance premium you pay in Ontario.
Quote note - the reason why the price differs from one insurance company to the next is that each insurance company factors these considerations differently in their decision making. Working with an insurance broker like Bryson Insurance ensures you are finding an insurance carrier best suited to your unique situation.
Here is what impacts the premium you pay for car insurance
Your age and how long you have been driving
Generally speaking, insurance premium rates decrease as you get older (until about 75 years old). More important than age is how many years you have been driving. Insurance companies care more about duration of driving than your age.
Studies show that teens are two and a half times more likely to be involved in a car crash than 20-to-24-year-olds. Compared with more experienced drivers, the risk of teens being involved in a crash is even greater.
In most cases, the best solution for a teenage driver is to be part of their parents’ auto insurance policy. This will impact the cost of insurance, but not to the same extent as if that teenager had their own auto insurance policy.
Tickets and Driving Infractions
Recent tickets for speeding and traffic violations have the potential to impact your car insurance premium. Minor violations or one speeding ticket will have less chance of impacting your insurance premium, but an accumulation of tickets in a short period of time can change the narrative quickly.
The positive news is that the increase is not permanent. Tickets generally fall off our driving record after a few years.
*Bonus note* We receive many questions about the impact of parking tickets on your insurance premium. While annoying to pay, parking tickets do not impact your car insurance premium.
Insurance carriers do consider recent claims history when offering terms for insurance. At-fault claims impact your premium. The longer you have been at-fault claims free, the more positive effect it will have on your premium.
To protect your claims history, some insurance carriers also offer an optional First Claim Forgiveness Waiver that will protect your insurance premium following your first claim. Make sure you check out this option to determine if adding this extension is appropriate for you.
Accidents – at-fault and not-at-fault
Even the best drivers have bad days.
Recent at-fault accidents have a negative impact on your insurance premium.
Not-at-fault accidents should not have a negative impact on your insurance premium.
Car accidents and insurance could be a piece to itself. If you have a history of at-fault or not-at-fault accidents, it is best to consult your insurance broker. Vehicle usage
How do you use your vehicle? People who primarily use their vehicle for pleasure purposes enjoy lower insurance rates.
If you use your vehicle for large commutes to work or for money-earning purposes, like ridesharing services or for your business, insurance companies will charge more. Depending on the situation and the exact use of your vehicle, you may be required to get a commercial policy.
Location, location, location
Insurance is largely based on actuarial data. Actuarial science is applying statistics and mathematics to determining insurance premium. One of the biggest and most reliable data points in determining how likely you are to have an insurance incident is your postal code.
More densely populated areas have higher risk of theft, collisions and harm to your car.
Certain postal codes are likely to pay more for the comprehensive and collision portion of your auto insurance policy.
How you choose to pay
When selecting monthly payments, many insurance companies charge a minimal service fee. If you pay annually in advance this fee is waived. While this service fee does not directly impact your insurance premium, it does make a difference in how much money is in your pocket at the end of the day.
Accident benefit coverage selection
In Ontario, there is a basic minimum coverage for certain accident benefit coverage. Accident benefits include potential costs that could occur in the case you are injured in a car accident. These are things like replacing your income, catastrophic injury payment coverage, caregiver support and other costs.
In general, the basic minimum will be the most affordable while maxing out the benefit coverage will be most expensive.
Each individual situation is different. It is important to partner with an insurance brokerage who understands accident benefits and can have a conversation with you to see if you are adequately protected.
This may be an obvious one as well. The higher your deductible, the lower your insurance premium. Your deductible is basically how much you will be contributing to a claim.
If your deductible is high and you have a minor single car accident (example is bump into a pole) you may be more inclined to cover the expense yourself instead of making a formal claim. This saves the insurance company money. Said another way, their risk for paying for more minor claims is reduced.
This matters more to some insurance companies than others. It does make sense. The more your car is on the road and the more you’re behind the wheel, the greater the chance of being in an accident or having some other claim-related incident.
Engine size, type and age of vehicle
Smaller engine sizes traditionally provide lower insurance rates. Other factors that impact the premium include theft rates, design of vehicle (performance or family) and cost to repair.
A history of continuous insurance
Insurance companies really like drivers that do not have gaps or cancellations in their insurance history. Those that have not had gaps or cancellations (due to non-pay or other factors) will typically receive a lower premium. The longer you have been insured the better.
What else will save me money on my insurance premium?
Check with our team of professional home & auto insurance specialists to find out other methods to reduce your cost of insurance or enhance your overall value of your insurance.
Bundling insurance is another way to provide great savings on your insurance. Bundling is when you combine your home and car insurance with the same insurance carrier. Actions like this can provide substantial savings on your insurance premium.
Whether it is saving money or maximizing the value of your insurance, we believe knowing what you are paying for, understanding your coverage and making informed decisions will give you peace of mind and comfort while on the road.