Auto Insurance

This is how the car you drive affects your insurance rate

By: Jessica Mach on November 21, 2017

At LowestRates.ca, we’ve talked plenty about car insurance premiums and the factors that do and don’t affect them.

Up until this point, much of this coverage has been driver-centric, focusing on the age, gender, driving history and location of policy holders.

However, a spate of other factors that have less to do with you, and more to do with your car, also affect your premium rate — sometimes substantially. (None of them are related to the colour of your car.)

Scott Shields, director of operations at Direct Rate Insurance, identifies four key traits that insurers will consider when assessing your car and the type of coverage it needs.

Price

In the broadest sense, premium rates are a reflection of how much it would cost to repair or replace your car, should it get damaged, and how likely the car is to become damaged in the first place.

It makes sense, then, that insurers would impose higher premiums on more expensive cars than they would on less expensive ones – the former’s parts would cost more money to replace.

Higher-end cars might also be more susceptible to theft, Shields notes.

“From a resale value of the parts, thieves gravitate towards certain vehicles,” he says.

This higher risk relative to cheaper cars, combined with the higher cost of replacing an expensive vehicle or its parts, can drive premium rates up.

Age

The value of a car generally decreases with age, but that doesn’t necessarily mean older cars are cheaper to insure.

There’s no simple answer as to whether an older or newer car will command a higher premium. Because insurers determine premium rates based on how much money they would have to put out if a car is damaged, a car’s resilience is typically taken into account. Newer cars have a slew of safety features that can make them more resilient, such as emergency brakes that can soften an impact and lane-departure warnings that can help avoid or lessen damage in side collisions.

Pit against a newer car with safety features, an older car without those safety features might command a higher premium in comparison.

But, pit that same older car against another new car that doesn’t carry those safety features, and the newer car is likely to command a higher premium, due to its newer, more valuable parts and its comparable level of resilience.

Fuel type

Up until recently, you either drove a gas-powered car or a diesel.

But we’ve entered the electric age, and the number of electric and hybrid electric vehicles is growing. So, how does your car’s choice of fuel impact your insurance?

Again, it all comes down to cost, Shields says.

“If an electric vehicle’s in a crash, if that vehicle costs more to repair than a gasoline powered one, then it’s likely that the premium would be higher.”

Electric vehicles tend to be more expensive than their gas-powered counterparts and thus makes them more expensive to insure.

Model

Civic, Corolla, Corvette?

When an insurer assesses a car, one of the factors that it takes into account is its experience with that particular make and model, and whether there are notable patterns of behavior associated with that model’s drivers.

For example, if the insurer has extended coverage to a substantial number of four-door family Sedans, and experienced a low rate of payouts with that particular model, that insurance company will offer relatively low premium rates to cover it.

But if that insurer has also extended coverage to another model that it associates with a high accident rate, premiums for covering that model will be higher.

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