When leasing, financing, or buying a car outright, you are required to purchase car insurance. The purpose of car insurance is to protect you from any potential costs that can be incurred in the event that your vehicle is involved in an accident. Whether your own car is damaged or you cause damage to another person or their car, your car insurance will protect you against financial losses.
In addition to the mandatory minimum car insurance premium that you must get by law, you can also add additional coverage to your car insurance policy to increase the amount of protection you have. After you have made an agreement with the insurance provider regarding your policy and your rate, you will need to pay them your premium on a monthly basis in order to maintain your insurance policy and the protection it provides.
What factors determine car insurance rates?
There are several factors considered by your car insurance provider when they are determining your premium rate. Your location matters because your rates could go up or down depending on how many other people are driving where you live. Living in a bigger, crowded city tends to inflate your rate, whereas living rurally can drop it.
The make and model of your car are significant aspects. If your vehicle is statistically deemed safer, you could save some money, but if it has a higher risk of being stolen, you will likely pay more. Your driving history is a big factor, too. If you have committed any severe traffic violations, it may increase your rate, especially if you have multiple infractions on your record.
As well, your past claims history is taken into account. Even if you were involved in accidents that were not deemed your fault, having many claims on your record will drive up your rate. Insurance providers also care about how much you typically drive, since the more you are on the road, the higher chance you have of being involved in an accident. If you tend to have lower yearly mileage, your rate could go down significantly.
Your credit is another factor as well. Drivers with good credit scores usually get a discounted rate. Being married can have the same effect since married drivers are statistically less likely to be involved in accidents. Of course, the type of coverage and policy you choose also has an effect on the cost of your rate.
Though most people are aware of the factors mentioned above, some are surprised by the fact that age and gender are both significant factors in determining your premium rate.
How Age Affects Your Car Insurance Rates
Just like many of the other factors considered when your car insurance premium rate is determined, your age and gender can have a significant impact due to statistics. Drivers of a certain age or gender that have been statistically proven to be a higher risk will have to pay more for their car insurance than those that are decidedly a lower risk.
Teenage drivers typically have to pay the highest premiums, whereas people in their 50s usually get offered the best rates. From age 20-25, most drivers’ premium costs drop significantly. By the time you are 25, your car insurance rate usually drops by about 33%. On average, rates continuously go down until the driver turns 70; then, they start increasing once again.
Do men or women pay more for car insurance?
Men almost always pay higher car insurance premium rates than women in the same age group. Gender is a factor that is especially taken into consideration when you are a young, inexperienced driver. That is because male drivers are statistically more likely to exhibit risky driving behaviour, such as driving without a seatbelt or drinking and driving, and those statistics are even more extreme amongst younger drivers.
That also means that male drivers have a statistically higher chance of being involved in car accidents than women. The difference between what men and women typically have to pay for their insurance varies depending on your age and location. For instance, in Montreal, males aged 17-19 pay 16% more than females on average, while males aged 40-60 usually only pay 11% more than females.
However, in Toronto, males aged 17-19 typically pay 27% more than females, while males and females typically pay comparable rates after age 40. If all of the statistics across Canada are taken into consideration, women tend to pay anywhere from 5%-15% less than men.
How You Can Save Money on Car Insurance
Fortunately, there are several ways that can have a potential impact on lowering the premium rates you will have to pay your insurance provider. Taking advantage of various discounts and policy-building methods offered by your insurance provider is the key to unlocking lower rates.
You can likely qualify for a multi-line discount if you bundle your home and auto insurance policies together under the same insurance provider. Multi-vehicle discounts are also offered by most insurance providers. Thus, If you insure multiple vehicles with the same insurance provider, you can qualify for lower-priced premiums.
Increasing your deductible can drop your insurance premium as well. The deductible is the amount you agree to pay for damages before your insurance protection comes into effect. If you avoid getting into accidents, you will never have to worry about paying the deductible amount. Yet, you can continue to take advantage of the lower rate.
Of course, you can lower your premium rate by considering the factors involved in your rate determination. Choosing a “lower-risk” vehicle, improving your driving record, and working on your credit score can all grant you access to lower rates. If you are a new driver, you can lower your rate by taking a driver’s education course.
Things to Consider While Shopping Around for Car Insurance
The process that most insurance providers go through when determining your car insurance premium rate is lengthy and quite complicated since there are so many factors to consider. For that reason, it might be quite hard to know what to expect when it comes to the rates you will be offered.
Unfortunately, you have no control over most of the factors being considered, such as your location, age, and gender, because these matters are all entirely dependent upon statistics.
However, you can give yourself an advantage and gain access to better rates by maintaining a good driving record, improving your credit score, driving a “low-risk” vehicle, and shopping around for various discounts and promotions offered by your insurance provider.
Author
Jessica Coates is a blogger in Toronto. She graduated with honors from the University of British Columbia with a dual degree in Business Administration and Creative Writing. Jessica Coates is a community manager for small businesses across Canada. When not working, she leisurely studies economics, history, law and business solutions.