Auto Insurance Rates Explained

Learn why factors such as car repair costs are causing an increase in insurance rates. With auto insurance rates on the rise across the country, it’s important to realize there are many elements that contribute to these increases. Whether you’re purchasing a new policy or renewing an existing one, understanding these factors will give you insights into how your rates are calculated.

SOME FACTORS ARE BEYOND YOUR CONTROL

Even if you’ve had no tickets, no accidents, and no claims, you could see higher premiums than you might expect.

Windshields now have built-in technology
New advanced driver assistance systems make windshields more expensive to replace. Recalibrating a car’s computer system following a windshield replacement also adds to labour costs.
Front and rear bumper sensors are pricey
Even a tiny fender bender can require a bumper replacement. Many repairs also require a vehicle’s computer system to be recalibrated for the sensors to work. Those extra labour costs can really add up.
Fancy autonomous features
Newer vehicles can now come with a whole range of autonomous capabilities like adaptive cruise control and park assist. As you might expect, they also use complex computer systems and sensors that cost more to repair.
At-fault collisions, traffic tickets or violations, and license suspensions
If you have an accident where you’re determined to be at fault, you’re considered a higher risk to insure (plus you could lose out on a claims-free discount if you had one). Traffic tickets or violations and having your license suspended (if not for an administrative or medical reason) also increase your risk level, which often results in higher premiums.
Fraudulent claims
Fraudsters who stage accidents to make money are affecting the entire industry. In Ontario alone, the Insurance Bureau of Canada reports that car insurance fraud costs drivers an estimated $1.6 billion each year (or about $236 per driver). Rates increase to cover these costs.
Distracted driving
Distracted driving now outpaces drunk driving as a leading cause of accidents and deaths on the roads, and the damage that occurs in distracted driving-related accidents tends to be more severe. Premiums often increase to offset these costs.
Medical services are more expensive
It’s not just physical repairs that can cause premiums to rise. If you’re injured in an accident, you might need medical services like physiotherapy to recover. And like everything else today, these services cost more every year.
Trends that show your area as a higher risk for collisions, theft, or other incidents
Your premiums could increase if analytics show that your area has become more prone to risks (like extra traffic congestion or extreme weather events that lead to collisions, for example).