Car insurance rates: a "CLEAR" picture

By Sally Praskey
Special to Kanetix

Your car is getting older - not better. But, hey, at least your insurance premiums should go down as your vehicle ages. After all, it isn't worth as much now, so it shouldn't cost as much to insure - right?

Wrong! That's not how car insurance rates are calculated - at least not anymore. It used to be that insurers relied primarily on the Manufacturers' Suggested Retail Price to rate cars' potential for claims - the newer and more expensive the car, the more it would cost to insure it. Now, however, almost all insurance companies use the "CLEAR" - Canadian Loss Experience Automobile Rating - system, which groups cars based on their claims experience, such as cost of repairs, frequency and severity of injury claims, and frequency of theft.

Safer is cheaper

That means that newer cars offering safety features, like airbags and antilock brakes, as well as anti-theft devices, may well cost less to insure than older cars that may be more prone to accidents or more expensive to repair. Your rusty old sedan, for example, may not be on car thieves' most-wanted list, but its lack of safety features that are common in newer models will probably drive up your premiums.

The CLEAR system has been praised by the Consumers' Association of Canada because it encourages car manufacturers to build safer cars, and rewards consumers for buying those cars. It is also fairer for motorists, because those who drive safer vehicles do not have to subsidize cars with higher loss costs.

For example, let's take two different cars, each costing $25,000. Yet one model gets stolen 10 times more often than the other, or gets involved in more collisions, or costs more to repair. Is it fair to charge both car owners the same amount for their insurance?

How does your car rate?

You can find out how your car's claims experience compares with that of other makes and models through the Vehicle Information Centre of Canada (VICC), a non-profit organization that developed the CLEAR system. Use the VICC's How cars measure up tool to look at the claims experience of the most popular Canadian models of cars, passenger vans, sport-utility vehicles, and pick-up trucks.

So if you want to save money on your insurance, choose a car model that not only offers safety and security features, but is also less popular with car thieves. The biggest offenders, from an insurance standpoint: sports cars and sport-utility vehicles. The least expensive to insure: those four-door sedans so beloved by the more conservative among us.

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Of course, vehicle claim experience is only one factor insurance companies may use in calculating your insurance rates; others include the use of the car (how far do you drive it on a regular basis?), where you live (in a city or in the country?), and - most important - your driving record. Safety saves!

Sally Praskey is the editor of Insurance Canada,, an insurance-related Web site for consumers and professionals, and co-author of The Insurance Book: what Canadians really need to know before buying insurance.


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