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How Your Car Model Impacts Insurance Rates

Ever wondered how your auto insurer calculates your insurance premium?

Well, each company has its own proprietary formula. So that’s a bit of a mystery. However, what we do know is that a number of factors related to your car impact your premium rate.

What are those factors? More importantly, how can you bring your insurance bill down?

Continue reading to find out the answers to these questions and more.

Car Age

A car loses its value with age. That means older cars are cheaper to insure — right?

Yes and no.

In general, insurance rates are lower for older cars, but that’s not always the case. That’s because insurance companies don’t give as much importance to the model year as they do to things such as what’s under the hood and how often a car gets stolen.

Pit against a 90s Toyota Corolla a hot-off-the-assembly-line model will definitely be costlier to insure because of — you guessed it right — its newer, more valuable parts.

However, stack the same brand new Corolla against a 90s Porsche 911, and the latter is likely to command a much higher insurance quote.

Actually, when you think about it, it makes sense. You’re more likely to speed while driving a sports car than a family sedan; get speeding tickets; drive carelessly; and crash.

Since the risk of an accident is higher in the case of a sports car, regardless of its age, auto insurers may charge a higher premium for it.

Likewise, auto insurers may bump up car insurance rates for older models that are more frequently stolen.

Believe it or not, research shows bad guys get their jollies from stealing older, popular models, not the new sleek ride on the market. Therefore, if you drive a 2007 Ford F-350 — Canada’s most frequently stolen vehicle — expect to pay more for car insurance.

Safety Features

Having certain safety features in your car can help you shave precious dollars off your insurance premium. Many Canadian auto insurers hand out discounts to drivers whose cars feature electronic stability control (ESC), emergency brakes, a lane departure warning system, or an anti-theft device.

Features such as ESC or emergency brake can help avoid or lessen damage in case of a collision, whereas an anti-theft device brings down the risk of theft.

Compared to a car without advanced features, the one with safety features will have a lower insurance premium, if everything else remains the same.

Car Value

One of the factors auto insurance companies take into account when calculating a premium is the value of your car.

In general, if a car costs more to replace or repair, the insurer will charge you more to cover those potential costs. For example, if you own a brand new sports car and a 2009 Honda Civic, the monthly insurance cost of the latter is likely to be on the steeper side.

Fuel Type

Electric or hybrid cars are less costly to run than gas-powered models, but what about car insurance rates? Which one is cheaper to insure?

When you bring home an electric or hybrid car, you are literally showing fuel expenses the door. However, at the same time, you might be letting an unwanted guest — the higher cost of car insurance — slip in.

Electric cars are 18–32% more expensive to insure, according to the latest research. That’s mainly because electric models are more expensive and costly to repair than their gas-powered siblings; hence, they’re greener for the environment but not your wallet.

Model and Special Features

Civic Coupe, Civic Sedan, Civic Hatchback?

When calculating insurance premiums, an auto insurer considers its own experience with that car’s make and model.

For instance, if the company has extended coverage to a model with which it has experienced a high accident rate, it will raise its premium to cover the increased risk. On the other hand, it is likely to charge relatively lower premiums for a car that it associates with a low rate of payouts.

Insurers also take any modification that you have done to your car into account while deciding your insurance cost.

Although it may be tempting to add a turbocharged engine, install a high-end stereo or get suspension work done, these modifications come with a hitch — they can quickly cause your car insurance rates to skyrocket.

Auto insurers provides cover from risk, which increases when you get modifications done. For example, an upgraded sound system can make your baby more attractive to car thieves. This, as you can guess, is not something that will go well with your insurer, who in all probability is likely to respond by pushing the car insurance cost up.

Likewise, by hooking up a turbo to your car’s engine, you are basically telling your insurer that you love fast driving, a behavior associated with high accident rate and consequently high premiums.

Other smart ways to save

Canadian auto insurers offer consumers a number of ways to save on car insurance.

Bundle Discount

Insuring multiple vehicles or different items, such as your car and house, with the same provider can help you lower your car’s premium.

Telematics Discount

Most top insurers, if not all, offer a handsome discount if you participate in a program where they track your driving habits using either a GPS device or a mobile app.

These programs score you on factors such as rapid acceleration, hard braking, risky hours driving, speeding, and distracted driving. You then get a discount based on how well you perform.

Defensive Driving

If you are a young driver and want cheaper insurance quotes, consider joining an accredited driver education program.

Low Mileage Discount

People who drive long distances on a regular basis pay more for car insurance than those who drive less. The more kilometers you put behind the wheel, the higher the chances of an accident, regardless of how well you drive.

Consider joining a carpool or taking public transit. If you can bring your annual mileage down, it might help you get a cheaper car insurance quote.


Insurance companies reward customers who have been accident and violation-free for 5–6 years.


To sum up, a number of factors related to your car can affect your premium rate. However, how much weight insurance companies give to each of these factors is something that we will never know.

Which begs the question, what can you do to lower your insurance premium?

The answer is “compare, compare, compare.” If your car is up for renewal or you’re thinking of buying a new one, run it by different insurance companies to get a quote. The whole exercise won’t take much time but will help make sure that you don’t pay a cent more on car insurance than you have to.

Sushant Mehta

Sushant Mehta is an auto insurance specialist and a contributor at He has a keen interest in insurance, tech, and finance, and he’s been covering these topics for several years now. When he’s not working, he likes to escape to the lower Himalayas with a book or two to keep him company.

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