How does your daily commute affect your auto insurance rate?

By Shaistha Khan

Consider this: you’ve recently moved and your commute to work is now longer. Or as we settle back into post-pandemic life, perhaps your boss has asked you to come back in to the office. Informing your insurance company may be the last thing on your mind, but not doing so could cost you.

Key takeaways

Why is it important to let your insurance company know?

There are several factors that insurance companies consider when setting your auto insurance rate. Age, gender, where you live, the make and model of your car, how often you drive, and what you use your car for are some of them.

If you use your vehicle for business use, like ridesharing, food delivery, or transporting furniture for a moving company, you’ll need to purchase a commercial auto insurance policy.

But if you only use the vehicle for your personal use, like commuting to work, dropping off your kids to playdates, running errands, or taking family trips, you should have a personal auto insurance policy.

It doesn’t stop there. Depending on what you use your car for, there are further classifications.

Pleasure use: If you use your car for picking up your kids after karate class, grocery trips, visiting friends, or family vacations, insurance companies classify this as pleasure use.

Commute use: Using your car to drive to and from work or university is classified as commute use. From an insurance company’s perspective, the risk to insure a vehicle that is used for commuting to work is much greater than someone who uses the car only to run errands. Consider, for example, your chances of getting into a collision when you’re driving to work during peak hours. While you may be a cautious driver, that doesn’t necessarily mean others on the road won’t drive recklessly to get to work on time.

Commute mileage

Insurance companies use this information and your annual mileage to assess the risk involved with insuring your vehicle, and price your auto insurance policy accordingly. According to the Insurance Hotline car insurance quoter, if a 35-year-old male driver living in downtown Toronto increases their commute from five to 10 kilometres each way he’ll be bringing his mileage up to a total of 20,000 kilometres over the course of a year. Consequently, he can expect to pay eight per cent more in premiums.

Considering other factors like your postal code, driving record, the model of your car, if you have a long commute and are clocking up more kilometres, you’ll likely be paying higher insurance premiums as compared to someone who uses their car infrequently.

Conversely, if your commute time and distance has reduced — say, you’ve graduated from college and or are now working remotely — you can take advantage of lower insurance premiums.

In either case, let your insurance company know of a change in your situation. Misrepresenting or lying about how you use your vehicle, or your annual mileage is considered insurance fraud, and in the event of a collision, your insurance company can deny your claim or even cancel your policy.

How to get a lower auto insurance rate

While it might seem unfair that a long commute impacts your insurance rate (especially, if you have no say in the matter), there are ways to save on your monthly premiums.

  • Multi-vehicle discount. If you own more than one vehicle, you can club these vehicles under the same auto insurance policy or with the same insurance provider. By doing so, you can save up to 20 per cent on your insurance rate. And this doesn’t apply just to cars, but even to seasonal vehicles like campervans and motorcycles.
  • Home and auto insurance or multi-line discount. Similarly, bundling your home and auto insurance policies under the same insurance provider can save you five to 15 per cent off your combined premiums.
  • Usage-based insurance (UBI) discount. Some insurance providers encourage good driving behaviours with a UBI discount. They use telematics to monitor your driving performance, like how often you accelerate or how abruptly you push the brake pedal. By signing up for UBI, you can get a discount of up to 10 per cent on your auto insurance premium.
  • Using public transportation or carpool. Take public transit to work, or carpool with other colleagues a few days of the week. You’ll reduce your annual mileage, save trips to the pump and shrink your carbon footprint – a triple win!
  • Increase your deductible. You could consider increasing your deductible, which is the amount you’ll pay when you file a claim. The higher your deductible, the lower your insurance premium. By increasing your deductible, you can knock five to 10 per cent off your insurance premium. Just make sure you can afford the higher payment in the event you need to make a claim, as you’ll be paying that amount out-of-pocket.

It’s an unfortunate fact that the more you drive, the more you'll pay. But thankfully, there are plenty of ways to reduce your premiums. And one of the easiest ways to save on auto insurance from the get-go is to compare rates among multiple providers.

About the Author - Shaistha Khan

Shaistha Khan, Contributing writer

Shaistha Khan is a journalist, writer, and communications specialist with 13 years of experience across the personal finance, business and professional development, oil and gas, and travel and tourism industries. She has worked as a content editor and writer in seven countries, with Canada being the most recent.

Read more about the author