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Auto Insurance Rates Vary Wildly

June 12, 2009

These rates were based on a 35 year-old driver in Toronto (M5C 2C5) with 19 years license and insurance experience. Coverages are $1 million for liability, $500 collision deductible and $300 comprehensive deductible. 10,000 annual km with a commute distance of 5 km one-way to work. The vehicle was a 2001 Chrysler Intrepid 4 DR.

The comparison took the lowest and the highest rates for a clean record, 1 ticket, 2 tickets, 1 accident, and 1 ticket and 1 accident.

Driving Record Low High Difference
Clean Record $1,621 $4,784 $3,163
1 ticket $1,621 $4,784 $3,163
2 tickets $1,871 $5,424 $3,553
1 accident $2,805 $11,301 $8,496
1 ticket and 1 accident $3,115 $11,301 $8,186

Each ticket does count, even if it doesn’t count right away. By this, I mean that some companies raise your rate per ticket. One company’s rate went up $50 for one ticket, $150 for two tickets.

But for this example, the lowest company with a clean record had a rate of $1,621. With one ticket, it didn’t go up at all. But with a second ticket, it jumped $1,289! So even though your rate didn’t go up with a ticket, it means that you could be in for a significant increase on your second ticket.

It is important to minimize tickets. Even if it doesn’t affect your rate immediately, it could affect it bigtime later if you get another one.

From another example, when comparing a 2001 Chrysler Intrepid 4 DR (base vehicle) to a 2003 Toyota Celica GT 3 DR, there was a jump in price. What is significant is that the company offering the lowest rate for the Intrepid was not the same company that offered the lowest rate for the Celica. Different companies offer different rates for different vehicles, which is important to note for people interested in changing their vehicle.

Vehicle Low High Difference
2001 Chrysler Intrepid $1,621 $4,784 $3,163
2003 Toyota Celica GT $2,366 $7,034 $4,668

The third rate comparison was a 3-company comparison based on the different scenarios. What is significant is that a different company is the lowest in a certain situation.

Record Clean 1 ticket 2 tickets 1 accident 1 ticket & acc.
Company Rank-Rate Rank-Rate Rank-Rate Rank-Rate Rank-Rate
Comp. A 1-$1,621 1-$1,621 2-$2,910 2-$4,981 1-$4,981
Comp. B 2-$1,871 2-$1,871 1-$1,871 3-$5,021 2-$5,021
Comp. C 3-$2,629 3-$2,629 3-$3,527 1-$3,224 3-N/A

For example, if you have a clean record or 1 ticket, Company A is best for you. If you had two tickets though, many people would stay with their existing insurance company, meaning an increase of $1,289. If this driver went to www.InsuranceHotline.com and did a rate comparison, they would find Company B for $1,871, which would save them $1,039.

Company C seems expensive if you have a clean record, 1 ticket, or 2 tickets, so a driver may not wish to insure with them. But if they get into an accident, they would be able to save $1,757 by switching to this company, which offers a low rate of $3,224.

No single company offers the best rate for everyone. If your driving profile changes, do not assume that your company will still give you the best rate out there. The difference can be thousands of dollars.    

One final note on tickets: Company C offers a low rate of $3,224 for 1 accident. However, if you have a ticket, you no longer qualify for that rate. Therefore, you cannot get a rate from Company C. That means you have to buy insurance from Company A for $4,981. That ticket may not have affected your rate initially, but later on it can disqualify you from qualifying for really good rates.

It is important for drivers to be aware that sometimes 1 ticket can affect your rate, depending on the company. But even if it doesn’t affect your rate right away, it can affect it later on, especially by thousands of dollars. Some people may ignore a ticket because it doesn’t affect their insurance right away, but it could cost them a lot of money later.

It is also important to understand that there is no single company offering the best rates for everyone. If something changes, do a rate comparison immediately as protection. In the last rate example, we showed 3 companies, all of which could offer the lowest rate at substantial savings, depending on only a change in tickets or accidents. It’s important for consumers to be aware of this when looking at insurance.

Do a rate comparison right now to ensure you’re not overpaying for your auto insurance.