August 23, 2006
More than just type of car affects insurance, analyst says
Toronto, Ontario – The type of car you drive can determine how much you pay for insurance, but there is “much more going on,” according to Lee Romanov of InsuranceHotline.com. Romanov says that insurance companies use a safety rating system that “is invisible to the consumer”.
Romanov says that the Insurance Bureau of Canada uses the Canadian Loss Experience Automobile Rating (CLEAR) system, which assigns each vehicle model a four-digit number. Insurance companies submit claims data for each of these car codes; information from every reported collision contributes to the database and helps determine the cost of car insurance. “If the CLEAR system determines that your car model is costly to repair, has a high probability of theft, or is involved in high-cost injury or death claims, you’ll pay more for your insurance,” Romanov says.
Vehicles are rated on a scale of 1 to 5 for injury and death claims, with 1 being the safest and therefore least expensive to insure. Collision factors are unlimited, but generally range from 10 to 60, with premiums increasing as the numbers rise; comprehensive factors are also unlimited, but generally range between 10 and 50.
“A car with a comprehensive factor of 30, which insures against such things as fire, theft and vandalism, will cost more for comprehensive premium than a car with a comprehensive factor of 16,” Romanov says. “Factors taken into consideration in determining your car’s CLEAR score include antilock brakes, airbags, theft deterrent systems and depreciation. So this knowledge is helpful in purchasing a vehicle both for insurance premium and vehicle safety.”
However, Romanov says that while insurance companies clearly look at CLEAR as a rating tool, where you live, your age and driving record can “throw these numbers into chaos,” she says.