Five assorted cars of different colours in a parking lot

February 10, 2016

How your auto insurance rates are set – Part 2

1 min read


In Part 1 of this article, we explained how personal factors like your age, your type of car, and your driving record affect your auto insurance rates. However, these aren’t the only factors that affect rates. The type of insurance you purchase and the insurance company you choose also affects your car insurance rates. These factors can have just as much influence, if not more, on your car insurance premiums.

Factor: amount and type of insurance

If you remember, one of the reasons that living in an urban location can increase your rates is because cars are more likely to be stolen there. Of course, this only increases your rate if your car is insured against theft.

The most basic car insurance that you are required to have in order to drive legally doesn’t include theft or damage to your vehicle. Bare bones insurance packages like this do have lower rates because you are accepting more risk. Adding types of coverage like theft, collision, or medical will increase your rates. Similarly, increasing the maximum payout of your coverage will also increase your auto insurance rates.

Factor: amount of deductible

Your deductible is the amount of a claim that you are required to pay before your insurance company pays anything. Most insurance companies allow you to adjust your deductible, anywhere from zero to potentially thousands of dollars. The higher your deductible, the less your insurance company pays when you make a claim. You get a discount on your rates for having a higher deductible and pay more for a smaller deductible. Adjusting deductibles is one of the most common ways to adjust your insurance rates.

Factor: your insurance company

An odd thing you may notice if you compare two identical auto insurance packages offered by two different insurance companies is that the rate premium is usually different. The reason for this difference is the company itself. Insurance companies set rates based on their specific group of customers, or customer pool. If their overall customer pool is of higher risk than another insurance company’s, they charge higher rates to everyone in the pool. You will still pay less than someone else in the pool who has higher individual risk than you, but since the group risk is higher, your overall car insurance rates will be higher too. This is why it is well worth it to shop around!

Shopping for lower auto insurance rates?

Since we represent over 70 of the best insurance companies in Canada, we’d be happy to do the shopping around for you. Simply contact Mitch Insurance at 1-800-731-2228 or email us at Our team of auto insurance brokers will make car insurance easy for you!

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Speak with a Mitch Insurance broker today to get a quote on Ontario auto insurance. Learn more >

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Mitch Team

The articles you'll find on the Mitch blog are all the result of a team effort, contributed to by one or more of our RIBO licensed insurance brokers and/or other Ontario insurance experts. Contributors to our blog include:

  • Adam Mitchell (RIBO) - President and CEO of Mitch Insurance Brokers
  • Nick Kidd (RIBO) - Chief innovation officer at Mitch, & director of business insurance
  • Alex Gemmiti (BSc, CIP, RIBO) - Service team lead at Mitch Insurance
  • Jesica Ryzynski (RIBO) - Insurance broker, claims specialist, and account manager at Mitch Insurance

Learn more about the Mitch Team

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