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Car insurance rate calculator: how rates are calculated

Calculate and compare personalized car insurance quotes from Canada's top providers, in as little as five minutes. Taking time to understand auto insurance rate calculations and shopping the market is the best way to save.

How to compare car insurance quotes with Ratehub.ca

  1. Share information

    Tell us a little about yourself and your auto coverage needs.

  2. Compare quotes

    We instantly show you auto insurance quotes from top Canadian providers.

  3. Save money

    Choose your quote and secure your car insurance rate online.

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How car insurance rates are calculated

Every year, your car insurance renewal comes in the mail, and each time, a little voice inside your head wonders, "How much will it cost this time?"  That's because it seems to change every year, and often, not in your favour. The truth is, there are many factors and trying to calculate your car insurance premium by yourself is futile - especially when each insurance company utilizes a unique car insurance calculator (rate formula) to come up with their rates. But, we're going to help it all make sense.

The factors that determine your car insurance rates can be divided into four categories:

  1. Your driving profile (i.e. your location, demographics, how you drive and insurance history)
  2. Your level of coverage (i.e. how much protection you want)
  3. Your deductible (i.e. how much you're willing to co-pay for any claim)
  4. Your car insurance provider (i.e. how they calculate risk)

How your driving profile impacts car insurance rate calculations

Your personal profile as a driver is one of the first things a car insurance company will ask you about when you buy car insurance. Some of the things that may determine the cost of your car insurance premium include:

Your age


Your driving history


Your location


The type of car you drive


How much you drive


How your coverage amounts impact auto insurance rate calculations

The amount of coverage you decide to purchase is the next thing used to calculate your car insurance rate. All provinces and territories have their own rules on the mandatory and minimum coverages, at least for accident benefits (medical coverage after an accident) and third-party liability insurance. For example, suppose you buy car insurance in Ontario. In that case, you need to have at least $200,000 of third-party liability insurance, but in Quebec, it's only $50,000. Typically, most people buy third-party coverage between $1-5 million. It costs more but it protects you from severe financial consequences after an accident.

Outside of the mandatory policies, you can buy optional car insurance. Popular options include collision coverage, which repairs or replaces your car after an accident and comprehensive insurance protecting your vehicle from vandalism, theft, and falling trees. Other policy endorsements include accident forgiveness, disappearing deductible, and roadside assistance, to name a few. All of these optional coverages will increase the cost of your premium.

Calculate & compare your car insurance rates online

In under 5 minutes, you can compare personalized quotes from Canada's auto providers, for free. Find out what your best rate could be today.

How your deductibles impact auto insurance rate calculations

When you make a car insurance claim, you are responsible for paying a small portion of it yourself, called the deductible. You can save money on your insurance premiums by choosing a higher deductible. A higher deductible signals to your provider you're less likely to make a claim for minor damage. Your insurance company pays less because you're paying a larger portion.

There are deductibles for collision coverage, comprehensive insurance, all perils and specified perils insurance.

For example, opt for a $1,000 deductible with your comprehensive insurance, instead of $500. You'll get a small discount on that portion of your rate. However, if you make a $2,000 claim, you'll have to pay $1,000, instead of $500 before receiving any money from your insurer. To that end, you can also opt for a lower deductible and pay more for your car insurance. It's a decision based on your risk tolerance and financial situation. A higher deductible saves you money, but you have to be ready to pay more out of pocket.

How car insurance companies rate calculations differ

Each provider uses a different insurance calculator to determine what rates they'll charge. For instance, some provinces operate under a public car insurance system. In contrast, others are private (Quebec car insurance is a hybrid of the two). 

British Columbia, Manitoba and Saskatchewan operate public car insurance systems. So, all drivers in those provinces must purchase their mandatory car insurance coverage through those Crown Corporations. 

Drivers have no room to negotiate or ask for better rates. The idea being car insurance will be cheaper for all. Currently, BC has the most expensive insurance, though. Drivers in those provinces can purchase the optional coverage (e.g. collision, comprehensive) from other private companies. 

All other provinces and territories have private car insurance. Private car insurance allows drivers to use insurance brokers to help them get the best car insurance rate in their area.

Car insurance quotes also vary from provider-to-provider because of the data about drivers and their claims collected by each company. Every car insurance company has several "risk groups," and companies charge premiums based on each group's claims experience. 

So, when a car insurance company goes through your driving profile (outlined at the top), they will place you in a group. Whenever a driver in that group makes a claim, the premiums for everyone could go up. To that end, if claims go down for the group as a whole, premiums could also go down. Suppose a provider sees a spike in claims from a particular risk group. In that case, their car insurance calculations will increase for that group. It might not be the case with another provider, which is why shopping for car insurance quotes every year ensures you'll always pay the best price. 

What can't be used to calcuate a car insurance premium

Car insurance companies may not legally consider the following, when deciding how much your car insurance premiums will be:

  • Your credit history, including past bankruptcies. While some provinces have banned the use of credit scores, others say it helps evaluate a driver's risk and could result in lower premiums. 
  • Your employment status
  • How long you’ve lived in your current home
  • Whether you own or lease your vehicle (though your lessor typically requires optional coverages like collision and comprehensive)
  • Any period of time when you did not have car insurance 
  • Accidents for which you were not at fault

Frequently asked car insurance rate calculation questions

How much does car insurance cost?


How many car insurance claims per year will affect my premium?


Matt Hands, Business Director of Insurance

With 6+ years of experience at Ratehub.ca, Matt’s focus has been on growing its newest business unit, Insurance. He is a thought leader and a valuable resource to respected publications across Canada. read full bio

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