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Why doesn’t my car insurance rate go down as my car gets older?

July 9, 2015

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.

  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 vehicles most stolen 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.

Ask the Expert. Anne Marie Answers

At InsuranceHotline.com, we get tons of questions from our customers on a range of insurance issues. Follow our Ask the Expert series featuring resident insurance expert Anne Marie Thomas as she answers your most frequently asked insurance questions. Do you have a question about your policy, coverage, or anything else? Ask Anne Marie by using the hashtag #AskAnneMarie and posting your question to our Facebook or Twitter page. Or email us at contactus@insurancehotline.com. Your question could be answered in our next #AskAnneMarie video.


  • mike

    Hi Insurance Hotline,

    I have a bad driving record and I am the principle of my company. I want to lease a car for my company to write off taxes, will my bad driving record affect my insurance?

    My partner is also the main principle of the company, he has a good record, can the insurance company just look at his?

  • Fuddle_Duddle1

    I think the better question would be “why haven’t my insurance rates gone down 15% like the Ontario Liberals promised?”

  • Steve

    I wondered how much my insurance would decrease upon next renewal. It came in recently and was shocked that it went up 22.5%. Usually they go up gradually but this was huge and for a long time I still have a clean driving record.

  • perfectcritic

    I think you should look at BC where corporate Insurance Goons like ICBC rips you off by charging you insurance rates where in 10 years you actually pay the total cost of new car in the form of premiums and in 3 years you pay the your resale value of the car which could be 5 year old. You guys are in heaven as you have “choice” and we live in a communist kind of insurance cos.