by Iris Winston

A young male driver might apply the brakes to his dream of owning a loaded convertible import or sports utility vehicle when he checks out the cost of auto insurance. It could pay him to settle for a different type of four-by-four – a four-year-old, four-door sedan.

He may be a careful driver, who observes the rules of the road and has never been involved in a collision, but statistics show that many of his peers do not have a similarly clean driving record. So, while his experience is a significant part of the equation used to determine the cost of insurance, several other components factor in the reckoning.

As automobile insurance rates are based on statistics and loss ratios, he will pay for the errors of other drivers, particularly those of other single males in his own age range. The type and age of the vehicle, the number of claims and the information about other drivers are just as important in setting the figure that can range from an annual low of $600 to $3,000 or more for similar coverage, depending on the other variables.

Insurance broker Brian Erwin, the Insurance Guy, says simply that “it’s a numbers game. The numbers dictate the rates.”

Bad loss ratios send rates up across the board. Pointing to last winter, he says that three snowstorms in two days resulted in more than 500 reportable collisions and subsequent claims in the city of Ottawa. Such a cluster of claims is bound to contribute to a general upward trend in costs to the insurer, which are then passed down to the insured collectively.

Actuaries explain that the mathematical formula used to calculate insurance rates is an exercise in comparing the actual number of claims with experts’ projections. They crunch such variables as the frequency of kinds of claims for specific vehicle types or models, the severity of crashes and driver profiles (age, gender, marital status and so on). They estimate and regularly revise their estimates of probabilities, based on experience and past statistics.

Then insurance companies add vehicle repair and replacement costs, plus the driving record of the individual driver to the risk tally and include the home base (via the driver’s postal code) to complete the rate-determining picture.

The combination of factors calls for complex calculations and results in a huge differential in rates.

A married (read ‘stable’) driver who has a clean record after 50 years on the road and drives his four-door, five-year-old domestic sedan for pleasure only is in line for preferred rates and various discounts. Many insurance companies offer five to 10 per cent reductions for seniors and those who do not drive to work. They may also reduce auto insurance rates for clients who insure their homes and lives with the same company.

At the other end of the scale is the single, 22-year-old male with no history of being insured and three moving violations, including one at-fault collision, who drives a high-powered, new sports car to work and lives more than 30 kilometres from his office.

The difference could be as much as $8,000 a year. Even without the extremes, the gap is significant.

If both these drivers are seeking similar insurance coverage ($1 million liability, $500 collision deductible, $300 comprehensive deductible and loss of use) on a four or five-year-old, four-door Chevrolet Cavalier, have clean driving records and neither drives to work, the older driver still wins. He has held a licence longer and the high-risk, under-25 male statistic does not affect him. His rate would be in the $700-$800 range. The younger man would pay close to $2,000. An under-25 female would be slightly better off. She would pay approximately $500 less with most insurance companies.

“The driver is the biggest contributing factor in the cost of auto insurance,” says Doug Mayhew, Public Relations Manager of the Canadian Automobile Association’s North and East Ontario division. “And rates can vary, so it pays to shop around. That doesn’t mean always going for the cheapest price. You need an insurance agent or broker who’s there for you when you need them.”

Vehicle characteristics, as well as drivers, feature large on the rate chart, points out insurance broker Kim Barkley of Carleton Insurance Brokers. In addition to such obvious differences as new versus old and family car versus sports car or SUV, a particular make or model’s “crashability” and “theftability” come into play. (“Some cars are easier to steal than others,” she says.)

Convertibles and turbo models and other sports or speed-focused features send rates up. Some companies charge more to insure the sportier two-door than four-door models. Luxury cars, especially imports, are costly to insure because repair work and replacement parts are pricey.

Personal choices and specific situations also have a major effect on the cost of insurance. The amount of the collision deductible or liability coverage is reflected in the rate. Overnight shifts and a rural location that rule out using public transport to go to work mean that there can be no “pleasure driving only” reduction.

Simply put, the driver’s history, the type of car and the amount it is used, combined with general vehicle and pay-out statistics determine the risk for the insurer and the cost to the insured.

Is the system fair? Probably not for our young and careful male driver. Probably so for your male drivers in general.

Says Doug Mayhew: “I would call the system reasonable rather than fair. Those that categorically represent the heaviest risk factor pay the heaviest premium.”

Factors affecting auto insurance rates:


  • Year
  • Model
  • Type/style
  • Origin (domestic/import)
  • Loss/repair rate


  • Age
  • Gender
  • Marital status
  • Years licensed
  • Driving record
  • Driver training (for first year of insurance)
  • Driving to work/pleasure only
  • Distance from work


  • General loss ratios
  • Number of claims from other drivers in same category
  • Frequency of claims for crashes or thefts of particular makes/models/types

Sample rates (figures may vary slightly among companies)

Similar coverage: $500 collision deductible, $1 million liability insurance, $300 comprehensive deductible, limited loss of use.

Distance driven annually: Average of 10,000-15,000 km

Location: Driver lives downtown and does not use the vehicle to drive to work

Vehicle: 1998, four-door Chevrolet Cavalier sedan


  • Single male, under 25, licensed at 16, with clean driving record: $1,927-$2,177
  • Single female, under 25, licensed at 16, with clean driving record: $1,409-$1,700
  • Male or female, over 45, licensed at 16, with clean driving record: $888-$1,100
  • Male or female, retired, licensed at 16, with clean driving record, driving for pleasure only: $634-$812
  • Single male, under 25, licensed at 16, with two minor convictions: $2,800

(No change from $1,927 with one company and no change for under-25 female from $1,409 with two companies)

Changing several variables can change the rate significantly:

  • Single male, under 25, living 32 km from work and driving his 2002 VW Passat GLS each day, with three minor speeding convictions: $2,636-$3,900 (depending on the insurance company.)

The same male with one at-fault collision as one of the three convictions

(Tax, two per cent in Ontario, is added to these rates.)

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