Most Albertans know car insurance premiums can vary from person to person. But do you know the reasons behind those rate differences? As it turns out, there are some factors that determine why insurers charge what they do. They look at what makes you a low risk to insure. That means you're less likely to put in a claim.
What's Unique About Alberta's Insurance Rates?
Alberta has one of the highest average premium rates in the country. It ranks near the top of the list along with BC and Ontario. Alberta's car insurance is mandatory but provided by private insurers. Those insurers have to comply with the Automobile Insurance Rate Board rules when it comes to rates. One of those is the grid system, where insurers must charge either their own rate or the grid rate for basic coverage -- whichever is lower. According to the AIRB, only six percent of Alberta drivers pay the grid rate.
What Goes Into a Premium Calculation?
So what do insurers look at? It's what you might expect: insurers charge more when there's greater risk. Specifically, they look at where you live, your driving record, your vehicle, and your personal profile. Together, it adds up to a premium quote for your coverage. Here's a bit more detail.
Where You Live
It makes sense that with more traffic comes a greater chance of accidents. So, if you live in an area with more cars on the road, your premium may be more expensive. You can expect a higher car insurance quote if your postal code is in an urban area like Calgary or Edmonton than in a rural part of the province.
Your Driving Record
Safe drivers get lower premiums. So, if you have a history of traffic tickets, road violations, or criminal driving convictions, it's going to cost you. You can also expect to pay more if you have a history of prior claims of at fault accidents.
Some cars have well-known safety features, like built-in anti-theft devices or airbags. These elements mean a potential claim is less likely, or less costly. Those features can affect your auto premium. In addition, insurers in Canada use something called the Canadian Loss Experience Automobile Rating (CLEAR) to assign a rating to different car makes and models. CLEAR uses claims data to determine what type of vehicle is likely to be involved in a claim and how much it will cost. If your car has a low-risk CLEAR rating, it is reflected in lower premiums.
Your Personal Profile
It's tough for younger drivers, but they often have to pay more. That's because they have a higher rate of accidents than people who have been on the road longer. It takes time to build up a history of safe driving, but once that happens, premiums will often decrease.
Search for Alberta's Best Car Insurance Rates
Knowing all the factors that go into your premium is just the beginning. You can search online for the best car insurance quotes and compare your options at InsuranceHotline.com.
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