Auto insurance rates can vary greatly from person to person and vehicle to vehicle. Your rate is determined using a combination of factors or risk characteristics, outlined below.

1. Your personal profile 

Your personal insurance profile is created by your insurance company based on:

The type of vehicle you drive

Learn how your car measures up by reading How Cars Measure Up published by the Insurance Bureau of Canada (IBC).

Your driving record*

Your driving record includes previous accidents, the length of time you’ve been licensed, whether or not you’ve taken driver training, speeding tickets, impaired driving convictions, etc. The better your record, the lower your premium.

Where you live 

Auto insurance rates are usually higher in urban areas where accidents and car theft are more frequent.

Your age, gender and marital status

In general, mature drivers have fewer accidents than younger drivers, particularly teenagers. After the age of 25 years, insurance premiums typically drop considerably. Gender and marital status also affect your risk profile, and may make your rates vary.

The amount you drive

Your rates are also calculated based on the number of kilometres you drive per year, and whether or not you commute to work or school. As a rule of thumb, the more you drive, the higher your premiums.

2. The amount of coverage you purchase

If you buy additional protection, over and above the mandatory coverage, your rates will increase. If you drive an older vehicle, and forego collision and comprehensive coverage, your rates will be lower. Additional coverage that may increase your rates include:

  • Comprehensive coverage to protect against theft, vandalism, hail or explosion
  • Increasing your third party liability protection
  • Increasing your standard accident benefits coverage

Always discuss your options with your auto insurance agent or broker.

3. The deductible you choose

Your deductible is the portion you will be required to pay in the event that you make an auto insurance claim. Your insurance company may offer separate deductibles for:

  • Collision or Upset
  • Comprehensive
  • All Perils
  • Specified Perils 
  • Direct Compensation-Property Damage (DC-PD) coverages

As a general rule of thumb, the lower your deductible, the higher your premiums. The higher your deductible, the lower your premiums.

4. The insurance company you choose

Auto insurance premiums can vary substantially from one insurance company to another. In general, insurance works according to the “pooling” concept, in which insurers group similar risk characteristics, with similar risk groups. In this concept, some members of a risk group may never make a claim, while others may make substantial claims.

Actuaries analyze the financial costs of risk and uncertainty. They use math, statistics and financial theory to assess risk and estimate future claims that may be made by your risk group, to develop appropriate individual premiums.

Subsequently, if your risk group was responsible for multiple claims with a particular insurance company, that company's premiums may be higher than one with a different experience.

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