What is a car insurance premium?

A car insurance premium is the amount of money you pay an insurance company, for auto insurance coverage. It will help protect you financially if the unthinkable happens like getting in an accident or your car gets stolen. Car insurance is there to give you peace of mind.

What vehicle factors affect car insurance rates?

When you’re looking at what affects car insurance rates, here are some vehicle characteristics that you should keep in mind when you’re shopping for a car.

1. Model. A car’s retail price can play a part in a higher premium, since insurers have to consider how much a claim could cost if something happens to it. So, if you’re in the market for a luxury vehicle, you’ll probably pay more for car insurance since it’ll cost more to replace.

Insurers may also charge more for certain car models if they’re statistically more likely to be involved in an accident, stolen or vandalized. It goes without saying that these are things you want to avoid. But, what about cars that rank better when it comes to claims? The Insurance Bureau of Canada has a comprehensive list of popular types of cars to show the number and cost of various insurance claims of various makes and models. This list is especially helpful if you’re trying to gauge a general auto insurance rate by car.

As a guide, Équité Association releases an annual list of the top 10 vehicles stolen in Canada. These are vehicles you’ll want to avoid if you don’t want to pay higher premiums.

2. Trim. There are loads of extra bells and whistles that the manufacturer can add to a vehicle. These include special paint, graphics, leather interior, heated seats or faux wood surfaces. They’re generally grouped into packages identified by letters at the end of the model name, like GL, LE, LTD or SPORT. When calculating car insurance, these extra features cost more to repair or replace, which can make your premium more expensive.

3. Size. Vehicles can be grouped by body style – like two-door, four-door or minivan. Now, we can’t make a blanket statement about how vehicle size impacts car insurance. But, size can impact how likely a vehicle is to roll and its overall safety rating. For example, midsize vehicles like SUVs are generally more durable in an accident than two-door cars with lighter frames. An insurer could offer lower rates on midsize cars based on this type of safety rating.

4. Technology. If there’s one thing smartphone users know, it’s that fancy tech costs a lot to fix. The same goes for modern cars with convenient features like smartphone connectivity and wireless charging. Some new vehicles even have a built-in gaming system in the back seat to keep the kiddos occupied. But, these things aren’t cheap to replace. If your car is stacked with gadgets, you could end up paying a little more when your insurer is calculating your car insurance.

What about safety tech? Vehicles that have things like anti-lock brakes, anti-theft devices, and advanced driver-assistance system (ADAS) may quote a lower premium because they experience fewer claims. The cars may cost more upfront, but safety features are there to protect you and its money well spent.

5. Modifications. Unlike trim, which are features added by the manufacturer, a modification is an after-market change that alters the vehicle from the manufacturer’s standard specifications (like adding turbochargers or upgrading the suspension). Any changes you make to your car could raise the cost of repairing or replacing it. So remember, if you’re gearing up to modify your vehicle, it could increase your premium.

Tip: Before you customize your car, check with your insurance company to see if they actually insure modified vehicles. If they do, make sure they’ll approve the upgrades you intend to make. If they don’t, you’ll have to look for special insurance for a modified car.

Car details aside, the best tip to keep your insurance cost low is to be a good driver. Not only will you avoid expensive claims, but more importantly, you’ll keep yourself and the lives of others safe.

How can I save money on my auto insurance? 

There are many ways you can save on car insurance (and home insurance). It’s best to check with your insurer to see what they offer, here are a few potential savings to ask about:

• Multi-policy: Most insurers will give you savings if you have both your car and home policies with the same company. Or if you have multiple vehicles insured you could benefit from multi-vehicle savings.
• Good driving record: By following the rules of the road (no cell phone use, no speeding and no driving under the influence) you’ll probably avoid accidents. And, it helps you get cheaper car insurance.
• Group discount: Some insurers will offer savings for university and college alumni. And even some employers and associations have a group discount, so it doesn’t hurt to ask.
• Winter tires: Not only are winter tires safer because they provide better traction on snowy and icy roads, but you’ll also save more money. To qualify for this savings, you may have to provide a receipt or picture of all four tires with an illustration of a snowflake inside a mountain peak – check with your insurer.
• Switching insurers: Sometimes switching mid-term is easier and cheaper than you think. Try our insurance cancellation calculator to find out how much it could cost to cancel your current home or auto policy. If you’re comparing car insurance quotes, be sure that you’re looking at the same coverages as not all car insurance policies are equal. You don’t want any surprises if you have to make a claim.

Please note: This is general information based on vehicle trends in the industry. Details about you, your vehicle (and how it’s used), your driving history, and government regulated rates (among other information collected) are still the primary factors that determine your premium. No matter the car, a driver with a good record will probably pay less for insurance than a driver with a poor record. If you need details about your premium, contact your insurer.