Collision coverage pays for damage to your car if you hit another object like a car or a parking lot light post. It also covers damage to your vehicle if it rolls over.

Comprehensive insurance pays for damage from vandalism, fire, flood, theft, tornado, and pretty much any other physical damage not covered by collision.

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Ready for a long complicated theorem with x’s, y’s, brackets and squiggly math symbols? Don’t worry we’re not going to give you a math exam. Instead here’s a straightforward overview that explains all the factors that affect how an insurance company determines your insurance rate.

Here’s what it looks like:

Your driving record + Your car + How much you drive + Who’s driving + Where you live + Your coverage = Your insurance premium

Now here’s a more detailed look at each section. No calculator needed.

Your driving record

Your driving record is based on these three things:
· how long you've been licensed to drive
· how long you’ve been insured
· number of convictions or at-fault accidents over a certain period of time.

Now here’s how you can affect your driving record:

Your driving quality – By driving safely and defensively to avoid convictions and at-fault accidents you will reduce your premium.

Your insurance history – By maintaining an insurance history, you give other insurance companies a solid understanding of your driving experience. This gives them the information they need to give you an accurate premium. Without a consistent history, insurance companies cannot verify your experience and will likely charge you a higher premium. Unfortunately, in this case, they literally can’t afford to give you the benefit of the doubt. If they did, and undercharged you incorrectly, this would increase the premiums of other policyholders, which include those people who have consistent driving histories.

Our equation

So, the better your driving quality plus the better your insurance history, the better your insurance rates.

Your car

So how exactly does an insurance company like Aviva calculate a premium for the brand name and model of car you drive? It’s actually pretty simple.

First Aviva checks out how many claims other people have made on your car’s make and model. This indicates if your type of car is frequently stolen, or is involved in a lot of collisions. Then Aviva takes a closer look at things like how much your car costs to repair andthe rate of injury associated with your car.

To reduce your premium here’s a couple of tips to consider:

Drive a less expensive car – Unfortunately the numbers can quickly add up. The more expensive your car, the higher your cost for repairs and the higher your premium.

Get safety features – The more safety features your car has the lower your premium because they protect you and the people driving with you. To see a full list of safety features for most makes and models, visit the Insurance Bureau of Canada’s website for its comprehensive annual list.

Drive an unpopular car – Well, at least with thieves. By driving a car model and make that’s rarely stolen you’ll automatically reduce your rates. You can see annual Top 10 lists of most stolen cars at the Insurance Bureau of Canada’s website.

How much you drive

The more you drive, the higher your chance of being involved in a collision, which means you’ll pay a higher premium.

Here’s a few ideas to cut down your driving time:

Car pool – Can you share the drive to work with someone else? You’ll not only keep more money in your wallet, but you’ll also keep the environment cleaner.

Walk – Do you need the car to go to the corner store or to drive yourself to the bus station, or is it close enough to walk? The bonus is you get some exercise and help reduce more emissions in the environment.

Take the bus or subway – You’ll save money, you’ll save the environment from your car emissions and you might even save time.

Who’s driving

Do you have teenagers, inexperienced drivers or a number of drivers using a car? Yes to any of those can affect your insurance rate. Having more drivers means your car is probably on the road more often, which increases the risk of it being involved in an accident.

Where you live

Unfortunately, there are more accidents, and more auto theft and vandalism claims in the city than anywhere else. Since an insurance company manages more claims from city dwellers, this means city dwellers generally pay a higher premium. But if you live outside a metropolitan area you’ll typically pay less.

Your coverage

When you get car insurance you pick the kind of coverage you want – Third Party, Collision etc – the limits you want on it – i.e. $1,000,000 on Third Party Liability, plus your deductible limit for each. All of your picks will affect the insurance premiums you pay.

For example, if you pick a higher coverage limit like - $2,000,000 for Third Party Liability Coverage you’ll pay a higher premium for that coverage. But if you choose not to get other coverages like optional coverages, your premium will stay put. Also the higher your deductible, the lower your premium.

Of course it’s a bonus to keep your costs down, but the real benefit of insurance is that it protects you from situations that could harm you financially. Make sure you pick the coverage that gives you the protection you need.

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Your deductible is the dollar amount you are required to pay of the total amount of your claim. Insurance companies offer a variety of deductible amounts for their coverage. At Aviva for example, you can pick a minimum deductible of $500 to a maximum deductible of $5000. Here’s how it works:

Let’s say you chose a $500 deductible. You’ve just gone grocery shopping but as you back up in your car, you don’t see a post behind you. Crunch. In the blink of an eye, you’ve just caused $2,000 worth of damage. The good news: Aviva agrees to pay your claim. But you’re responsible for the first $500 of the $2000 total. This is your deductible. Aviva will then pay the remaining $1500 of the claim.

Your deductible and premium also influence each other. The higher your chosen deductible, the lower your premium and vice versa. Your deductible amount is printed on your Certificate of Automobile Insurance. Before you choose your deductible, consider the following:

· Is your car expensive to repair? If you’re in a collision and have high deductibles on your coverage you could save money.
· Is it cheap to repair? Even if you’re in a collision, it might not be worth having a high deductible on your coverage.

If you’re still not sure what your deductible amount should be, make sure to ask your insurance advisor for help.

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They are both optional coverages that you can choose to buy. But if you finance your car, your finance company will require you to carry it. If you own your car, it’s up to you if you want it. But it can definitely give you peace of mind, if you are involved in an accident or something unexpected happens to your car.

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In short, it depends on how much more you increase them. For example, if you increase your deductibles on other coverage like Collision, you can save money on your overall premium.

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