Why Doesn’t My Car Insurance Rate Go down as My Car Gets Older?

As car insurance myths go, this is one myth that seems to have some real staying power. Many drivers think that their insurance will go down as their car depreciates, but this isn’t necessarily true.

There are several reasons why your rates may not decrease as your car depreciates.

  1. Your car insurance policy is made up of a variety of coverages. The two that are typically common across most of Canada are:
    • Accident Benefits: This pays for things like medical and rehabilitation treatments, funeral expenses, and loss of income due to disability and death that resulted from injuries or death sustained in an accident. It is compulsory in most provinces and territories in Canada.
    • Third-party liability: This covers you if you are held legally liable when your vehicle injures someone or damages their property. Third-party liability coverage is compulsory in all provinces and territories in Canada.

Combined, these two coverages, which have nothing to do with the value of your car, usually make up the majority of your premium dollar.

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2. Most collision claims don’t result in a total loss. Instead, claims often simply involve repairing a vehicle to its pre-accident state. The cost to repair a damaged vehicle does not typically correlate with the age of the car; in fact, it’s likely not all that much different to repair a two-year-old Honda Civic vs. a five-year-old Honda Civic.

3. Theft rates matter, and while you’d think a new shiny car would be more attractive to thieves this isn’t the case. Year after year, the most stolen vehicles in Canada tend to be older, often at least eight or more model years old.

Of course, your car insurance rate is calculated on more than just the car you drive. It’s based on your driving record, insurance history and where you live as well. There’s a lot that goes into your insurance rate, and driving an older or cheaper car does not necessarily mean you’ll pay less for insurance.

If you feel like you’re paying too much, compare car insurance quotes today to make sure you’re getting the best deal possible.