How Cars are Rated and How it Affects Insurance Premiums

Although most people are well aware of how their driving record affects their insurance premiums, many don’t realize just how much their car itself affects insurance rates as well. Insurance providers use specific criteria to establish the cost of your premiums. Go to resources

Almost everything about your car, including the year, make, and model, affects the rate. These factors are important to understand, especially when shopping around for a new car.

Related: How your Ontario driver licence type affects auto insurance rates

Year, make, and model

Your car’s age has a lot to do with your insurance premiums. That is because the older your car gets, the more value it loses. Car depreciation is the gradual decline in the value of a vehicle over time due to factors like wear and tear, and market demand. The less valuable your car, the less expensive it may be to repair or replace. This makes it cheaper to insure because the risk to the insurance company of paying out a large claim is reduced.

Each car depreciates at a different rate, and each car starts with a different value, so the impact on rates varies across different vehicles. But typically, an older car is cheaper to insure.

For instance, a 35-year-old male driver in Toronto could pay approximately $2,640 annually for a 2013 Honda Civic, but the same driver might face a higher premium of $3,362 for a 2022 model, highlighting the impact of newer model years on insurance costs.

Two different car models from the same manufacturer have different insurance costs

The make and model of your vehicle have a big impact on rates as well. High-end luxury cars usually cost more to insure because they are more valuable to begin with. The cost of parts, repairs, or even replacement in the event of a total loss can be a very expensive payout for the insurance company. Thus, they will charge a higher premium.

The model also influences insurance rates. Two cars that are from the same manufacturer but are different models can have different rates.

Comparing two 2023 models, the Honda Odyssey might result in a premium of $2,914 for the same driver, while the Honda Civic model could cost $3,403.

Related: Does the manufacturer’s suggested retail price (MSRP) affect my car insurance rate?

In fact, even the difference between two cars with different trim levels can make a difference. A car's trim level is the version of a particular model, like the 2021 Hyundai Santa Fe, which has four trims: SE, SEL, Limited, and Calligraphy, each offering different features. Your insurance provider will use your car's identification number (ID) to identify the specific trim package it has.

A sedan, for example, may cost less to insure than the coupe version of the same car. This is because coupes could be considered sportier and statistically, a higher risk of being in an accident.

Related: Top 5 ways to protect your car and prolong its life

Top 10 most stolen vehicles in Canada

According to the Insurance Bureau of Canada (IBC), the annual cost of auto theft exceeds $1 billion for Canadians.

Auto thefts in Ontario increased by 48% in 2022 and 50% in Quebec. The 2020 Honda CR-V was the #1 most stolen vehicle in Canada of 2022 for the second year in a row.

Related: Auto thefts spike in Canada in cold weather

Insurance companies use statistics on the frequency of theft for every car on the market to help them determine the risk of theft for each model of car. Certain cars consistently make the most-stolen lists, and these cars will typically cost more to insure.

Here is the list on the top ten most stolen vehicles of 2022:

  1. 2020 Honda CR-V
  2. 2022 Dodge RAM 1500 Series
  3. 2020 Ford 150 Series
  4. 2020 Lexus RX Series
  5. 2021 Toyota Highlander
  6. 2019 Honda Civic
  7. 2021 Jeep Grand Cherokee
  8. 2020 Land Rover Range Rover
  9. 2006 Chevrolet/GMC Silverado/Sierra 1500 Series
  10. 2021 Jeep Wrangler

While anti-theft devices like steering wheel locks, or security tire clamps can help to reduce the risk of theft and thus bring down your insurance rates, a car that is commonly stolen will continue to carry a higher premium. How vulnerable a car is to the possibility of theft is one of the things that is important to think about when car shopping. Choosing a vehicle that is commonly targeted by thieves will result in higher costs if you consider comprehensive coverage.

Read more: Your guide to fire and theft deductible endorsements

Value and risk

Car ratings are determined by evaluating two main factors, derived from comprehensive information about the vehicle’s year, make, model, and theft statistics. What it all boils down to is the value of your car, and the risk of theft or accidents.

The value of your car will mainly affect the ‘optional’ components of your insurance, such as collision coverage. While dropping collision coverage could potentially reduce your rates, it is generally not recommended, since the higher the value of your car, the harder it would be for you to pay for any damage or replacement costs.

Read more: Comprehensive coverage: When to consider dropping it

Insurance companies use a complex system of statistics and their own value system to determine the premiums for each portion of your insurance coverage.

The risk factors related to theft and accidents will impact various areas of your car insurance rates. Accident statistics mainly impact the cost of your liability and accident benefits insurance, with your driving record and experience playing significant roles, as well.

Although your car is only part of the equation, two people with identical vehicles can find themselves paying very different rates. Insurance premiums are calculated using many different factors including, but not limited to, your driving record, where you live, and insurance history.

While not all factors are within a driver’s control, the choice of the car is. Taking the time to get quotes for various models before you buy can result in substantial savings.

Comparing car insurance quotes during the car shopping process helps calculate the total cost of ownership, preventing surprises after the purchase.

Read next: 13 tips for first-time car buyers