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11 FACTORS THAT AFFECT YOUR AUTO INSURANCE PREMIUM


As an Insurance broker, one common question we get is a customer comparing his / her rates with the rate their neighbors, friends or family members are paying. Your auto insurance rates are affected by many factors. Many of which are under your control. Here are 11 important factors that impact auto insurance premium, which are:


  1. Your driving record

  2. Where you live

  3. Your demographics

  4. How much you drive

  5. How you use your car

  6. Your insurance history

  7. The value of your vehicle

  8. If you’ve taken driver’s training

  9. Security or damage prevention devices

  10. The make, model and year of your vehicle

  11. Your insurance options including coverage, limits, and deductible


We’ll discuss each of these factors in more detail below.


YOUR DRIVING RECORD


Your driving record has the biggest impact on your Insurance Premiums. The number of years you’ve been licensed, as well as tickets you’ve received, accidents you’ve been at-fault in and How many year of previous Insurance you have. In Generally, the longer you’ve been licensed, the lower your insurance Premiums will be. Keep in mind that any gap in your license or prior policy can also impact your premiums.


Minor conviction will remain listed on your driving record for three years of the date they are paid, while major convictions (such as driving under the influence) can affect you for up to 6 years. Tickets do not include photo radar or parking tickets. Accidents generally stay on your record for six years but can impact your rates for up to ten years. If you weren’t at-fault in an accident, it won’t be on your record.


WHERE YOU LIVE


At the moment Insurance companies base their premiums on your Postal code or Zone that you live in. Crime rate and claim rate in your area will certainly affects your auto insurance rates. The higher the likelihood of theft, vandalism, or a claim, the higher your auto insurance rates will be.  For example, many residents of Toronto in Ontario have higher car insurance rates then someone residing in Timmins Ontario. 



YOUR DEMOGRAPHICS


Insurance companies determine how likely it is that you’ll be in an accident or make a claim using statistics from other drivers in you demographic. Here are the demographics that commonly impact your auto insurance rates:

  • Your Sex

  • Your Age

  • Your Occupation

  • Your Marital status

For example, younger drivers are more likely to be in an accident, so they’ll often have higher rates. 


HOW MUCH YOU DRIVE


To put it Simple, the more you drive, the Higher the chance of being involved in a motor vehicle accident. Therefore, your auto insurance rates will correspond with how much you drive. Those who drive a lot, will pay higher rates than those who drive very little. 


HOW YOU USE YOUR CAR


If you commute to work, carpool, or use your vehicle for work purposes or construction then you’re more to have a larger claim then someone who is retired. You will likely pay higher auto insurance premiums.


YOUR INSURANCE HISTORY


Insurance history has a big impact on what you insurance premium will be. This helps Insurance companies determine if you’ll be a “good” customer. Previous payment issues is or cancellations for non payment are big red marks on your report, and make it difficult to find a company to insure you. Usually, the longer you’ve been insured without interruption the lower your rates will be. However, this will depend on the insurance company, the reason for cancellation, and the period of time you’re uninsured. 



THE VALUE OF YOUR VEHICLE


When you purchase a new vehicle, your offered a decision of which loss settlement you prefer if your vehicle is a complete write-off in a claim. The purchase price of your vehicle is often used as the basis for the loss settlement. 


Let’s say you Purchased a vehicle for $35,000. and you chose "actual cash value", you would be paid the purchase price minus depreciation. If you chose "replacement cost", you’d a similar price of what you purchased the vehicle for whatever it would cost to get the same vehicle or something of similar kind and quality.


DRIVER’S TRAINING COURSES


Before taking a drivers training course, speak to your broker to find an approved training course in your area. Most Insurance companies offer discounts to new driver with the course.


SECURITY AND DAMAGE MITIGATION DEVICES


Have a security alarm installed? Most Insurance companies give you discounts on your auto insurance rates if you have approved security devices or damage mitigation devices installed in your vehicle. 


Different insurers may accept different devices, so talk to your broker about which ones can get a discount with your insurance company.


THE MAKE, MODEL, AND YEAR OF YOUR VEHICLE


One of the biggest impacts on your premiums is the make, model and year of your vehicle:

  • The theft rate of the vehicle

  • The safety features of your vehicle

  • The claim rate of the vehicle

  • The repair or replacement cost of the vehicle

Insurance companies can determine how likely it is your vehicle will be involved in a claim and if so, how severe the accident will likely be based on the make, model and year of your vehicle


YOUR INSURANCE OPTIONS


Your insurance options have a large impact on your auto insurance rates. Your choices include:

  • Your coverage – Whether you need Collision, Comprehensive or just liability

  • Coverage or policy limits – this is the maximum amount that will be paid out in the event of a claim

  • Loss settlement – this is how the payment will be calculated if your vehicle is a write-off in a claim

  • Deductible – the amount you pay out of pocket after a claim


TELEMATICS – USAGE BASED INSURANCE 


Telematics, also known as usage-based insurance, can give you customized auto insurance rates based on your driving habits and apply a discount to your insurance. Currently, insurers are not allowed to use this information to raise your rates. 



Have any questions or need to talk to a qualified broker, click the link below 

 

Tom Putman (Insurance Broker) - Sudbury On, 705.618.1957

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