5 Factors That Impact Auto Insurance Rates in Canada

The responsibilities of being a car owner in Canada go beyond maintaining a Auto. In fact, it is mandatory by law that all drivers have car insurance to protect themselves and their car against financial loss in the event of an accident or other damages. People pay a certain premium for it and the insurance company agrees to cover the losses as outlined in the policy.

However, when you consider car insurance coverage, the first thing that often comes to mind is the annual rate you pay for it. Typically, there are several factors that affect auto insurance premiums, some of which you can control and others you cannot. 

While shopping for car insurance and comparing different rates is the best way to ensure you aren’t overpaying, you should also get familiar with the factors that determine your premium. To help you along, here is a list of the five most common factors insurers take into account to set your auto insurance rate in Canada. 

Vehicle type, make, and model 

The type, make, and model of the car you own can significantly impact your auto insurance rate. This is because the vehicle you drive informs the insurance company of your potential risk level which directly affects your premium. The general rule is the higher risk you pose, the higher your premiums will be. 

For example, cars with lowest insurance rates in Canada are those that have lower repair and replacement costs, don’t require expensive maintenance, don’t include fancy features, and have an average or above-average safety rating. Some examples of such cars are minivans and SUVs as opposed to sedans and hybrid vehicles which are among the most expensive types of cars to insure. 

Driving history 

Another factor that insurance companies take into consideration when calculating your auto insurance rates is your driving history. This includes everything from your overall driving experience to any major and minor traffic violations you may have that will give your insurance provider insight into your driving habits.

For instance, if you have a history of several speeding tickets, the insurance company may think of you as a potential risk and will most likely charge you a higher rate. That’s why it is important that you keep your driving record as clean as possible so you can keep your rate low. 


Where you live in Canada can also have a significant impact on your auto insurance rate. When calculating your rate, your insurance provider will ask for your address and regions where you drive your car the most, especially if you use it to go to work or run personal errands on a daily basis.

The thing is people who live in more populous cities such as Toronto or Calgary are believed to be at a greater risk of getting into an accident as there is more traffic on the road. 

Additionally, if you live in an area that experiences climate-related incidents such as floods and wildfires, it can also affect your insurance premium. 


A factor that is also taken into account when calculating an auto insurance rate is your age. There is a direct correlation between age and risk level which indicates that the younger the driver is, the less driving experience they have and the higher their chances are of getting into an accident. 

In fact, it is because of this reason why drivers who are under the age of 25 pay the highest car insurance premiums in Canada. 

On the other hand, those who are under the age of 60 also pay higher rates because they are believed to be at a greater risk of crashing due to old age-related conditions.

Insurance options

Your insurance options can also affect your auto insurance rate in Canada. These choices include:

  • The type of coverage you purchase which outlines what is covered by your insurance
  • Policy limits which indicate the maximum amount that will be paid out in the event of a claim
  • Loss settlement which refers to how the payment will be calculated if your vehicle is deemed a write-off
  • Deductibles which is the amount you pay out of pocket before your auto insurance kicks in

That’s why it is recommended that you work with an experienced car insurance broker to help you choose the right coverage for the best price that fits your needs and budget.

Final thoughts

There are several factors that are taken into consideration when calculating your auto insurance rates in Canada. From your driving history to the type of coverage you purchase, make sure you understand what insurance providers take into account so you can get the right policy for the best price.

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