What determines the cost of car insurance?
All drivers must be covered by car insurance. It’s the law. Several factors influence insurance cost which is determined based on your risk level as a driver. The factors taken into consideration by insurers include:
1. The vehicle
The vehicle make, model, year and equipment are taken into consideration when calculating your car insurance premium. Sports cars, SUVs and other luxury automobiles are more expensive to insure. On the other hand, some vehicles that are deemed safer can mean lower car insurance premiums. Insurers also refer to the " Top 10 Most Stolen Cars " list published every year by the IBC (Insurance Bureau of Canada). If your vehicle is on the list, it could mean higher premiums for you.
2. Your profile
Your age, gender and driving experience are other factors that determine the cost of insurance. Therefore, a young driver with no driving experience who purchases his first car generally pays the highest car insurance premium.
3. Where you live
There is a higher risk of a claim in major cities. Car theft is widespread and the probability of being involved in an accident is greater. Thus the greater the risk, the higher the car insurance premium.
4. Car usage and distance travelled
Using your car every day to commute to work for example, and racking up a high number of kilometres every year increases the risk of accidents. Once again: the higher the risk, the higher the premium… This is all the more true if you use your vehicle for your job, which you should never hide from your insurer if you don’t want to end up in a sticky situation.
5. Your driving record
Prudence and compliance with the Highway Safety Code are essential to getting an affordable premium rate. Avoid infractions! In Quebec, you can obtain a copy of your driving record by submitting a request via the SAAQ Online Services. The record will indicate the status of your driver’s licence, your demerit points, the infractions you have committed, your driving experience, etc.
6. Your credit score
Did you know that more and more insurers are using credit information to establish insurance cost? Don’t worry, they cannot obtain this information without your permission. If you are the type of person who always pays your bills on time and has an excellent credit score, you will most likely pay a low premium. Why? Because it has been proven that people who have a good credit record are less likely to make a claim.
In Quebec, the law requires drivers to have minimum civil liability coverage of $50,000, which you’ve got to admit is really minimal. Most people opt for $1 million coverage as it only costs a few more dollars to be really well insured. The selected coverage and deductible amount (a deductible is the amount you agree to pay out-of-pocket for a claim) will also impact your premium amount.
Lastly, if you are looking for car insurance that satisfies your needs at a suitable cost then you should really shop around. You will be surprised at the price difference from one insurer to another.