Each insurance company has its own particular formula for calculating what it charges for any given policy. Its procedures are presented to and approved by a government agency before being offered to consumers. After approval, these rules become the guidelines for that company’s policies, and they cannot vary their methods without first having changes approved.
Most insurers use the same factors to calculate risk, and therefore cost, even if they weigh each factor differently than their competitors. From a driver’s standpoint, the single most important factor over which they have control are their own driving habits. Those who follow safe driving practices and avoid traffic tickets and at fault accidents achieve the lowest rates. Age and gender also play a role. Generally, young drivers are more at risk and pay higher auto insurance rates as they establish driving and insurance histories. Young men are statistically a higher risk than young women, so there is a rate difference there.
The driver’s home location is anther influencing factor. A neighbourhood’s accident and claims history factors into its residents’ car insurance rates. For example, Brampton is the most expensive region in the province. Drivers living there can pay about $1,000 more than they would in other parts of the province, simply due to the location.
Finally, the vehicle itself and how it’s driven affect cost. A driver who uses a car to drive to work daily pays more than one who works from home or uses public transit. The distance driven, both daily and annually, also influence policy price. A car that drives more miles is at greater risk of incident than one driven occasionally over short distances. A four door sedan or SUV, typical family vehicles, are cheaper to insure than coupe or off-road versions of the same vehicles.
On top of that, options and discounts factor into insurance premiums. These vary greatly by both drivers’ needs and insurer availability.