Auto Insurance Rate Calculations
Understand how your rates are calculated
Insurance providers have completed extensive studies and collected databases full of statistics on claims and accidents. Based on all of this information, they can use mathematic formulas to calculate the odds that any particular person will make a claim and what the average cost of the claim will be. This "actuarial modeling" is used to assign rates to different categories of drivers. Depending on what category you fall into, the insurance company will assign the rate associated with that category.
Auto insurance categories are based on age, gender, licensing status and driving experience in Canada, motor vehicle accident and conviction record, where you live (high/low density, urban/rural), use of your vehicle (business/pleasure), and year, make and model of vehicle (market value, theft potential, repair costs).
Insurance providers and brokers do not have the ability to offer consumers just any premium. This is because automobile rates are regulated and must be filed and approved by the government before they can be released to the public. Once these rates are approved, the insurance provider and brokers are not permitted to deviate from these rates until a new set of rates has been formally approved.
Since insurance providers do compete for business, some charge less for higher risk drivers, and others are willing to offer better rates for lower risk drivers.
Understand how government auto reductions affect you
August 23, 2013 the Minister of Finance announced a targeted 15% average rate reduction on Ontario auto insurance premiums. Click here to learn how the government auto reductions affect you.