What Your Car Insurance Provider Doesn't Want You to Know

What Your Car Insurance Provider Doesn't Want You to Know

Written by Caitlin Wood
Last Updated May 6, 2021

What Your Car Insurance Provider Doesn’t Want You to Know

Car insurance is a complicated industry and your provider can sometimes seem like an all-knowing voice on the other side of the telephone line that doesn’t have to reveal how your rate was calculated. Obviously, car insurance is something that everyone has to have and has to pay for each month but understanding how the number that appears on your bill is determined could go a long way towards deciding if your current provider is the best choice for you and your situation.

Here are 6 things that affect your insurance rate and that your car insurance provider doesn’t want you to know about them.

On Average, Women Pay Less

There is significant research and information that shows that on average women end up paying around 5% less than their male counterparts. While 5% might seem like a rather small percentage, over a life time of driving this means that a woman could end up saving upwards of $10,000 on their car insurance. 5% is a small number but $10,000 is most definitely not. There is a simple reason why women pay less for car insurance. That is, generally speaking, men drive more aggressively than women and therefore over a life time will have to file more claims.

Education is Important

An Ivy League school education isn’t necessary and you don’t have to understand calculus or how to apply physics to your everyday life. But your car insurance provider will want to know what level of school you’ve achieved and they will used it when they calculate your rate. In the eyes of an insurance provider the more education you have (i.e. the more degrees you have) the less expensive your insurance will be. There is quite a lot of debate surrounding this practice as it paints the picture that insurance providers believe that people who have more education are better drivers or will get in fewer accidents. But whatever your insurance provider really believes, this practice is real.

Check out how you can save money on your car insurance

Your Credit Score Might be Used Against You

Insurance provider’s use of your credit score to determine rates and risks is a controversial topic. The laws that govern this issue vary from province to province so it’s in your best interest to research the province and city you live in to make sure you have the best information about what affects your current situation.

Insurance providers argue that a person’s credit score is the best way to predict their future financial responsibility. Meaning that if a person has a low credit score and a poor credit history they’ll more be unlikely to make payments on time. The issue is how do a person’s financial issues or lack of issues predict their driving abilities?

In most provinces you can legally refuse to provide your credit score, but this also means you probably won’t be able to get car insurance.

Credit score

Location, Location, Location.

If you’ve ever moved from province to province then you’ll probably already know this, but location is another big factor in the calculation of your car insurance rate. Depending on where you live in Canada your rates could drastically higher or lower than average. Ontario has the highest insurance rates in the country, with Alberta coming in with the second highest. Unfortunately car insurance is a service that all divers need and moving to another province simply to qualify for cheaper insurance isn’t a practical option.

Insurance Premiums Decrease With Age

Not only will you be judged based on your gender, education, financial history and the place you live you’ll also be judged on your age. According to a study conducted by Insureye, Canadians between the ages of 25 – 30 paid the highest amount and Canadians between the ages of 56 -60 paid the lowest. However, while your insurance rate falls with age, it does pick up again as you turn 75. This is a factor that you can’t really change, but it’s a good idea to know and understand what affects the price you pay for insurance.

Does your car insurance policy protect you or the car

Your Car and Driving Needs 

Your car model, safety features and overall value are also considered when determining your insurance rates. The higher the value of your car, the higher your insurance premium will be. In addition to your car’s value, what you use your car for will also affect your insurance rate. The number of many miles you drive, where you drive, for what purpose do you drive (ex: work, school), all of it will affect your rate. 

Auto Financing 101

Ask about discounts.

There are typically several different kinds of discounts available to you, no matter you age, gender or location. The catch is you need to ask about them because your provider probably won’t tell you about them. Car insurance is expensive no matter what but there is a chance that you are currently paying way more than you should be. Ask you provider about multi-car discounts, bundling, safe or married driver discounts and home owner discounts. There’s chance you might not qualify for any discounts but it never hurts to ask.

When purchasing a car, be sure to ask your dealer these questions

Bottom Line

Unfortunately the one major issue with the factors that determine your insurance rate is that you can’t really do anything to change them. You can’t change your age, or your gender and changing your location isn’t a practical option. The most important thing is that you arm yourself with the knowledge. It’s more difficult for insurance providers to take advantage of you if you no idea that’s going on, so inform yourself and be prepared to pay.

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Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.

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