The Six Factors that determine the Cost of Auto Insurance

Car insurance is one of those necessary bills that no one likes to pay; however, since basic coverage is mandatory in Canada everyone who drives their own car has to pay this bill. Auto insurance comes in one of two forms. Basic coverage pays for repairs and injuries to other parties that you may cause if you are involved in an accident where you are fault. Comprehensive insurance includes basic insurance and adds coverage for any loses that you may incur in the event of an accident where you are at fault; and it covers loss in the event of theft.

So what determines how much you pay for auto insurance?

The first factor is you place of residence; if you live in a crowded or congested area where accidents are more likely to occur, you will pay more than if you live in a rural area. In addition, if you live in an area where crime is high you will also pay more.

The second factor is your age. Auto insurance rates for those people under 25 are higher than for those people 25 and older. This is because insurance company studies show that those people under 25 tend to take more risks than those over 25.

Third, how far you drive on a yearly basis. Those people who drive more kilometers yearly will pay more than those who drive very little. This is due to the fact that the more you drive the more chance you have for an accident.

The next factor is the type of car you drive. The newer and more expensive car you drive, the higher your auto insurance premium will be.

The fifth factor affecting your premium cost is the type of insurance you want to carry. Since comprehensive insurance provides more coverage than basic insurance, it costs more.

Finally, the last factor that affects insurance rates is your driving record. If you have traffic violations or previous accidents, insurance companies will see you as a risk. Therefore, you will pay more for insurance than someone who has a clean driving record.

Interestingly, while gender was a factor in insurance rates, it is no longer. Good news if you’re a man, bad news if you’re a woman, but overall better for society.

These are the factors that affect auto insurance costs. Knowing this information will allow you to make an informed decision when selecting your auto insurance coverage.

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