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Car insurance calculator

Calculate and compare personalized car insurance quotes from Canada's top providers, in as little as five minutes, for free.

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. 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

  2. Your coverage

  3. Your deductible

  4. Your car insurance provider

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Your driving profile

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

Your coverage amount

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.

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Your deductible

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.

Your car insurance provider

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 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 leasor 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

FAQ about how car insurance rates are calculated

How much does car insurance cost?

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

Author Bio

Matt Hands, Business Director of Insurance

Matt started his professional career at CARPROOF where he honed his marketing and analytical skills for over 3 years. Matt then took his wealth of experience to Ratehub.ca’s Toronto offices, working with insurance providers, agents, and brokers to grow and expand the Insurance business unit. He is a thought leader in the community and a valuable insurance resource to respected publications like the Globe & Mail, Toronto Star, Huffington Post, Yahoo News, and 680 news radio in Toronto.

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