How The Car You Drive Affects Insurance Rates

How The Car You Drive Affects Insurance Rates

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Do you believe that you might be overspending on car insurance in Ontario? Many people are left in the dark when it comes to understanding how car insurance rates are calculated. While some obvious factors are an individual’s driving history and how much coverage is needed, there are other determinants such as the type of vehicle that is being insured.

The type of vehicle that one drives is actually one of the biggest factors in the premiums of Canadian car insurance. The make and model, age, and extra features on a vehicle can make a premium go up in price or make the insured eligible for various discounts.

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For example, new vehicles or vehicles that are fairly expensive, can costs a lot more to repair or replace if an accident happens. Insurers look at the possible risks and the costs of repair or replacement when determining a premium, giving them an idea of what kind of loss the insurance company stands to experience financially should an accident occur. If the insured drives a vehicle that is widely popular, one is likely to see their insurance premium decrease because there would be plenty of parts available to use in repair of the vehicle. For popular, common cars, used parts and aftermarket parts are plentiful and cheaper to obtain.

In addition to popularity, the type of car insured also affects premium because of the probability of an accident that a specific vehicle carries. Sports cars, for example, are more like to be driven at high speeds; therefore they are more likely to be involved in accidents that require repairs or replacement. Not only is the probability of an accident considered, but the chance of a vehicle being stolen is considered as well. Cars that have a high rate of occupant injury or that are customized with expensive or rare parts are also more expensive to insure.

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On the positive end, if a vehicle has built in safety features then often discounts will be factored into the premium. Discounts are also available for cars that have anti-theft devices or alarms.

An easy way to think of an insurance policy is as though the insured is putting money into a sort of savings account with the insurance company, so if something does happen, the money will be there to repair or replace the vehicle. A bank would not allow a customer to withdraw more money than what is in their savings account, and insurance companies don’t want to do this either. They want to make sure that a customer is partially paying in advance for what they will be out.

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Before buying a particular vehicle or motorcycle, it is a good idea to get quotes from several insurance agencies and compare premium amounts. This way there won’t be any surprises after the vehicle is purchased, and one can factor in the cost of insurance with the cost of the car.

Most Canadians would like to do something about their insurance cost, particularly parents looking for insurance for young drivers. Your choice in vehicle can certainly affect the quotes you receive.

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