This is how the car you drive affects your insurance rate

This article has been updated from a previous version. 

You’ve spent weeks researching cars. You’ve compared fuel economy, cargo space, and whether the seats are heated. Now you’re down to two choices. But before you make your final decision, ask yourself one more thing: How much will this car cost to insure?

The type of car you choose has a direct impact on your monthly budget. Canadian insurance companies look at many details — including theft risk, safety features, repair costs, and even the trim level you pick.

This guide explains what matters most to insurers and how you can use that information to save money.

How do car insurance companies set premiums?

It may seem random, but insurers actually use real Canadian claims data to price the exact year, make, model, and trim of your car. They check:

• How often that vehicle gets into collisions
• How expensive it is to repair
• How often it’s stolen

A lot of this comes from systems like CLEAR (Canadian Loss Experience Automobile Rating), which tracks loss and claim patterns.

In short, the more likely your car is to be involved in a claim — and the more expensive it is to fix — the more you’ll pay. Here are the major factors that influence cost.

Vehicle price and depreciation (new vs. used)

New cars usually cost more to repair or replace, so collision and comprehensive premiums tend to be higher for newer, more valuable models.

As a car gets older and loses value, insurance for it may become cheaper — unless that specific model starts to show higher theft rates or more costly claims.

Repairability and technology

Modern cars have excellent safety features, but they’re also full of advanced technology.

A minor crash that might have cost $500 to repair ten years ago could cost $2,500 today because bumpers now contain cameras, sensors, and radar. Cars with expensive parts or specialized labour requirements generally cost more to insure — insurers price in those higher repair bills.

Theft risk

Auto theft costs Canadians more than $1 billion each year, according to the Insurance Bureau of Canada. Even though some reports showed a small drop in theft claims in early 2024, the overall financial impact is still very high.

Not all cars are targeted equally. For example, the Toyota RAV4 is currently the most stolen vehicle in Canada, according to Équité Association.

Other vehicles that rank high on the most‑stolen list in 2024 include:

• Lexus TX Series
• Toyota Grand Highlander
• Land Rover Defender Series

If you drive a high‑risk vehicle, you may have to pay a high‑theft surcharge. Adding aftermarket anti‑theft devices can help lower premiums, but choosing a vehicle with a lower theft rate is the most reliable way to avoid extra fees.

Basic vs. luxury — and why trim level matters

Luxury trims include more expensive materials and added features, such as:

• Matrix/LED headlights
• Premium audio systems
• Panoramic roofs
• Larger wheels
• Advanced driver‑assistance features

Because these parts are more costly to repair or replace, insurers often charge more for higher trims. Two trims of the same model can have very different insurance prices — mainly due to the extra technology, glass, lighting, and electronics in the premium version.

Fuel type and efficiency

Insurers don’t directly rate your car based on fuel efficiency (like MPG). Instead, they focus on risk and repair costs.

Fuel type affects insurance indirectly because:

• Diesel engines and EV batteries can be expensive to repair
• Some fuel types influence the car’s price
• Certain vehicle types attract different kinds of drivers

So, any difference you see in premiums usually relates to these factors — not fuel efficiency itself.

Safety rating

Cars that earn an IIHS TOP SAFETY PICK+ score must pass several strict crash tests, including protection for back‑seat passengers.

To get the “plus” rating, a car must:

• Perform well in all major crash tests
• Have good or acceptable headlights on every trim
• Show strong pedestrian‑detection and crash‑avoidance performance (day and night)

Because these cars are built to protect people better in a crash, insurers often view them as lower risk — which can mean lower premiums.

Data from the LowestRates auto insurance quoter shows: the Mazda CX‑30 is one of the least expensive TOP SAFETY PICK+ vehicles to insure, averaging $1,995 per year.

Other affordable, safe options include the Hyundai Kona, Hyundai Tucson, and Mazda 3 sedan.

These models balance safety, reliability, and cost — making them popular choices for budget‑conscious drivers.

Related: The most popular fuel types among used vehicles in Canada

What are the cheapest cars to insure?

In general, small SUVs and compact cars tend to have the lowest insurance costs. They’re typically cheaper to repair, have strong safety records, and are less likely to generate expensive claims — traits insurers reward with lower rates.

Conversely, larger or luxury models — like the BMW X5, which averages about $3,500 a year to insure, or the 2024 Mercedes‑Benz C‑Class at roughly $4,000 annually — tend to come with higher premiums due to expensive parts and costlier repairs.

Related: Do different types of collisions impact your car insurance rates?

How to get cheaper insurance and lower your premiums

While this guide focuses on how your choice of car affects insurance costs, your driving habits now play a growing role too. Many insurers offer usage‑based insurance programs that track factors such as how hard you brake, how quickly you accelerate, the time of day you drive, and the number of kilometres you travel.

Usage matters too — consider Usage Based Insurance (UBI)

If you’re a safe driver with a clean record, you shouldn’t have to pay higher premiums because of other people’s bad habits. That’s where telematics, also known as Usage‑Based Insurance (UBI), comes in. UBI lets you pay based on your own driving behaviour.

Here’s how it works: your insurer gives you an app to download or a small plug‑in device to install in your car. This technology tracks things like your speed, how sharply you brake, how far you drive, and what time of day you’re on the road.

UBI programs reward safe habits. Many drivers save 10 to 25% on their premiums, and steady, safe driving over time can lead to even larger discounts.

There is a trade‑off: if the data shows risky driving, you could face a surcharge. But for experienced, consistent drivers, UBI can be a powerful way to lower costs.

Learn more: Telematics and car insurance: what is it, and what are the benefits?

Install safety and anti-theft features

Safety technology can lower your chance of getting into a crash, which should help reduce insurance costs — but the relationship is a bit more complicated.

Standard vs. advanced features

Basic safety features like airbags, anti‑lock brakes (ABS), and backup cameras are now standard and already included in your insurance pricing.

Advanced features — such as automatic emergency braking, lane‑keep assist, and blind‑spot monitoring — can prevent collisions altogether. These systems make your car safer, but they also add expensive parts and sensors, which can raise repair costs.

Even so, many insurers offer discounts for cars with automatic emergency braking or other advanced driver‑assistance systems (ADAS), because they significantly reduce the number of claims.

Anti-theft devices

Anti‑theft tools like immobilizers, alarms, and GPS trackers are some of the best ways to protect your car.

• Factory‑installed: Most newer vehicles already come with built‑in immobilizers.
• Aftermarket: If you drive a high‑risk vehicle, your insurer may ask you to install a Tag tracking system or a steering wheel lock before they’ll offer full comprehensive coverage. Adding these devices often unlocks an anti‑theft discount — usually 5–25%, depending on the insurer.

Learn more: Is car safety technology going to lead to cheaper auto insurance rates?

Bundling strategies and more discounts

You likely qualify for more discounts than you realize. Maximizing these options is the easiest way to lower your premium without changing your coverage.

• Bundle policies: Combining your auto and home insurance with the same provider is the single most effective way to save. It typically yields savings of 10–20% on both policies.
• Safe-driver discounts: If you’ve gone years without a ticket or accident, let your insurer recognize it. Your clean record is a valuable asset.
• Other discounts: Ask about discounts for multi-vehicle households, and even retiree discounts if you have recently left the workforce.

Read more: How Ontario drivers are saving money on premiums: survey

5 tangible tips to lower your premium

You don’t have to just accept the first rate that your insurer hands you. You have the power to influence your rate. Here is a checklist for your next renewal or vehicle purchase:

1. Increase deductibles: Raising your deductibles from $500 to $1,000 can significantly lower your monthly premium. Just make sure you have the funds available in case of a claim.
2. Consider your coverage needs: If your car is worth less than $3,000 or if the annual premiums for these coverages exceed 50% of the car's value, it may be time to drop them. For example, paying $1,750 annually to insure a car worth $3,500 might not make financial sense. This is especially true if you have a solid emergency fund to cover potential repair costs.
3. Drop unnecessary add-ons​: Depreciation protection endorsements (like the Limited Waiver of Depreciation) are only available for new vehicles and typically apply for the first 24–48 months after purchase. If your car is over 5 years old, this endorsement is no longer relevant.
4. Qualify for discounts: You can get up to 5% off your premiums for installing winter tires in Ontario.
5. Compare quotes annually: Loyalty doesn’t always pay. Rates vary widely between providers. Use an online comparison tool to make sure you aren’t overpaying.

If you want lower premiums without sacrificing utility: pick a mainstream model/trim with strong safety, modest repair costs, and low theft exposure; add UBI if your driving is consistently safe; and bundle and shop annually. This three‑part strategy outperforms chasing any single “cheap to insure” list on its own.

Read next: Everything you need to know when buying car insurance