This section fills you in on the mystery of how insurance premiums are calculated, points out how to reduce your insurance costs, and describes some handy insurance discounts. Calculating how much insurance you need to pay is a bit like completing a big jigsaw puzzle. You see, we use a number of factors to determine your automobile premium. This section explains how each of these factors affects your final insurance rate.
Your driving record
Your automobile
How you use your automobile
Where you live
Your coverage

Your driving record
Your driving record is based on the number of years you've been licensed to drive, your previous insurance experience, and your number of convictions or at-fault accidents over a certain period of time. If you drive safely and defensively to avoid convictions and at-fault accidents, your premium will be lower than if you've had a conviction or accident.

Maintaining a track record provides you and other insurance companies with the means to verify your driving experience. If you have a legitimate gap in your insurance track record, the insurance company will take this into consideration when calculating your automobile insurance premiums. In a nutshell, the better your driving record, the lower your insurance rates.

Your automobile
How do we establish premiums for your automobile? The actual claims experience of the makes and models of automobiles are used to establish your insurance premium. This means we will check into repair costs, the rate of injury, and the likelihood the car may be stolen.

If you own an expensive automobile, repair costs can be high. This can also mean you end up paying a higher automobile premium. If you have an automobile with safety features or a car that's not attractive to thieves, it will usually result in a lower automobile premium.

Check out the claims and safety record of your car at the Vehicle Information Centre of Canada Web site.

How you use your automobile
The more you use your automobile, the higher your chances of being involved in an automobile accident -- and the higher your insurance premium. In metropolitan areas, driving to work includes driving to a subway, bus or train station. You live close to work and don't use your automobile to get there? Then you'll probably have a lower premium than someone who lives far from work or needs to use his/her car for business.

If you have young or inexperienced drivers in your family or a number of drivers using an automobile, this may also affect your automobile insurance premium costs.

Where you live
Car insurance rates are generally higher in metropolitan areas. That's because there are a higher number of accidents, and theft or vandalism claims.

Your coverage
When you purchase automobile insurance, you select the coverage limits and deductibles.
When you make a claim, a small portion of the claim is always paid by you first, then your insurance company pays the rest. The portion you pay is called your deductible. If you select a higher coverage limit, you'll pay a higher premium.

If you select a lower deductible, you'll also pay a higher premium. Why? Because in both examples, you're asking the insurance company to assume more financial risk if you're involved in an accident or claim. If you select a lower limit of coverage or a higher deductible, you can reduce your premium costs.

For example, provincial law requires that you purchase a minimum coverage limit of $200,000 for Third Party Liability Coverage. If you select a higher coverage limit, for example, $1,000,000, you can expect to pay a higher premium for this coverage. Maybe you decide not to purchase an optional coverage. This is one way to save on your insurance premium costs. For example, if you have an older automobile, you might want to consider not purchasing collision or comprehensive coverage. After all, the automobile is probably not worth the additional premium cost.