Auto Insurance Rates Demystified

Allstate believes that Canadians can make better decisions about their car insurance if they understand how rates are calculated. There are two main categories that insurers use to determine your premium:
The Driver

  • Experience - insurance companies will consider a driver's record, including the number of years he or she has been licensed and accident-free. They will also consider whether there will be multiple drivers listed on the vehicle and whether the car will be driven by others. Previous claims and/or violations will also be taken into account.
  • Environment - how and where you drive your vehicle will also affect insurance costs. Do you live in a rural or urban area? Will your car be used daily for business or just for pleasure? Do you live in an area with a higher rate of vehicle theft?
  • Policy - your deductible, liability limit and any additional coverage will affect your premium.
  • Appetite for risk - speeding tickets, collisions, fender benders or a history of convictions will increase your premium.

The Vehicle

  • The type, year and safety rating of your vehicle will be taken into consideration. Factors include: how much a car costs to repair; how likely it is to be damaged in an accident; how likely it is to be stolen; and the likelihood of occupant injury and injury severity in the event of a collision.
  • More information on how car insurance is calculated can be found at How Cars Measure Up.

Insurance fraud, whether in the form of staged collisions or exaggerated claims, is another factor that costs all Canadians. According to a recent audit conducted by KPMG on behalf of the Insurance Bureau of Canada (IBC), the overall cost of fraud in 2010 was between $768 million and $1.56 billion (between $116 and $236 per average premium paid in Ontario in that year).

Allstate Canada reminds Canadians to be active in protecting yourself and stop fraud when you see it. Read more about fraud.