How Your car model affects your auto insurance rates

Laws everywhere in Canada require all owners of automobiles that are driven on public roads to obtain certain basic coverage.

In British Columbia, Saskatchewan and Manitoba, you can not obtain your vehicle registration unless you purchase the necessary basic insurance at the same time. Auto insurers might need a super computer to process all the variables that affect your premium; driving record, claims history, credit history, age, gender, amount and type of auto insurance purchased, where you live, and the type of car you drive, just to name a few.

The vehicle you choose can have a great impact on the auto insurance premium you pay practically if you purchase comprehensive and collision coverage. The combined average premium includes liability, comprehensive, and collision coverage.

Comprehensive and collision insurance premiums are calculated by looking at vehicle loss history, that is, how often that model is stolen and how much it costs to repair or replace it after an accident.

So how does it all work, IBC’s Insurance Information Services collects, validates and analyzes insurance-related data and publishes a wide range of statistical data. The IBC’s member companies have access to a large database of commercial and personal lines insurance information. IBC is the official agency for collecting and reporting auto insurance statistics and the agency also make statistics for commercial liability insurance in Ontario.

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Auto insurance companies want accurate rating information from IBC if they are to offer fair rates. IBC analyzes insurance loss costs for individual models of cars, develops recommended auto insurance ratings and provides a medium for manufacturers, consumers and insurers to talk about auto insurance issues. Not all vehicle publications are intended for use by the insurance industry, some pamphlets are produced with the consumer in mind. This type of information is becoming more and more important to the Canadian consumer in the market for a new or used car. In the past, vehicles of similar price would usually yield similar premiums, but this will no longer be the case, and the smart consumer will want to know all the information before making a buying decision. Here are some definitions:

Definitions

AB (Accident Benefits) - frequency of accident benefits (personal injury) claims

Claim cost - average amount paid in insurance claims for each vehicle.

Collision - average cost for collision coverage insurance claims.

Comp (comprehensive) - average cost per vehicle for comprehensive coverage insurance claims (including theft).

Theft claim cost - average amount paid out in theft claims for every insured vehicle.

Theft claim frequency - frequency of theft claims (that is, the number of claims reported as a percentage of the vehicles with comprehensive coverage).

Theft (theft indicator) - the expected change (up or down) in theft claim frequency for newer model year vehicles (i.e. a prediction about next year's results).

When you choose a used car proceed with caution, if it has bad record it could cost you a lot. It is then good to know about how theft, collision and other claims will affect the cost of your auto insurance.