Key factors that affect your auto insurance premium

You probably already know that the insurance premiums you and other policyholders pay are used to compensate those who file claims.

This is why your car insurance premium may increase, even if your personal record remains unchanged. It’s important to remember that insurance is based on risk pooling.

For example, a natural disaster affecting a large number of policyholders with the same insurer as you could lead to an increase in premiums for everyone.

That being said, the amount of your premium also depends on several factors specific to your profile. Here are a few:

Age and Driving Experience

Young drivers under 25 generally pay higher premiums as they are considered higher risk. On the other hand, an experienced driver with a good driving record often benefits from lower rates.

Additionally, men, being statistically more likely to be involved in serious accidents and to engage in risky driving behavior, tend to have higher premiums.

Driving History

A record free of accidents or infractions lowers insurance costs. Conversely, a history that includes traffic violations or at-fault accidents can significantly increase premiums.

Credit Score

In Quebec, as in some other provinces of Canada, insurers may consider your credit score when determining your premium. A good score can therefore help reduce costs.

Vehicle Type (Make, Model, and Year)

New, luxury, or sports cars are more expensive to insure because they cost more to repair and are more likely to be stolen.

Some features, such as anti-theft alarms, advanced braking systems, or GPS tracking devices, may qualify you for discounts.

Vehicle Usage

The more you drive, the more you pay. People who use their car for work or drive long distances generally have higher premiums.  Some insurers offer usage-based pricing programs.

Using a vehicle for commercial purposes (deliveries, passenger transport, etc.) results in higher premiums.

Place of Residence

In large cities like Toronto or Montreal, premiums are often higher due to an increased risk of theft and accidents.

Living in a high-crime area with frequent car thefts can also raise your premium.

Drivers in rural areas generally pay lower premiums.

Coverage Type and Deductibles

A policy with comprehensive coverage (collision, theft, high liability limits) costs more than basic insurance.

A higher deductible (the amount you pay in the event of a claim) reduces the premium but increases your out-of-pocket expenses in case of an accident.

Conclusion

While some factors, such as age or place of residence, are difficult to change, there are other ways to reduce costs (vehicle choice, driving behavior, etc.).