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How Are Car Insurance Premiums Calculated

A car can be one of the biggest investments you make. Insurance companies consider several factors when calculating your car insurance premiums. Knowing these factors will help you find the best coverage at the right price.

It can be tempting to reduce or remove coverage to help lower your premium. Remember, there are many factors that help determine and affect your premium.

Your Car

The make, model, and year of your car all affect your car insurance premiums. Insurers also look at statistics. If your car is statistically proven less likely to be involved in an accident or stolen, your premium might be lower. Another factor that might help lower your premium is if your car is less costly to repair.

Your Age

Your age may impact your car insurance premiums. Younger, less experienced drivers often pay more for car insurance than more experienced drivers.

How Often You Drive

Depending on how often you drive, you may be at an increased risk of being involved in an accident. Insurers determine this by looking at the number of kilometers you drive per year.

The Purpose Of Driving

If you use your car for work, you may need to get commercial car insurance coverage. Your business may also require a higher liability limit than is typically available through personal car insurance policies.

Your Driving Record

Your driving record determines how much of a risk you pose on the road. Generally, the better your record, the lower your car insurance premiums will be.

Insurers mainly look at:

  • The number of drivers and their driving records.
  • Years licensed.
  • Any convictions due to driving infractions.
  • The number of accidents you’ve had.
  • Speeding tickets.
The Coverage Add-Ons You Choose

The Government of Nova Scotia dictates the minimum coverage amount. The amount of extended coverage you decide to add on the higher your premium will be.

Cancellation For Non-Payment

If you’ve been canceled for non-payment your premium will increase. Insurance companies are worried you’ll miss more payments so you’re viewed as a higher risk.

Your Car Insurance Provider

Each insurance company uses a different insurance calculator to determine your premium. Insurance companies look at their data and claims history when quoting, therefore, insurance premiums vary between companies.

Factors Beyond Your Control

Some factors that affect your premium aren’t related to you or your car. For example, if the government introduces new regulation, or if the rate of inflation changes, your premium may be affected.

What Can’t Be Used To Calculate A Car Insurance Premium?

Insurance companies and brokers legally can’t consider the following when deciding how much your car insurance premium will be:

  • Your employment status.
  • Accidents that weren’t your fault.
  • Your credit score without consent.
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