While many Canadians find Insurance difficult to understand, St. Andrews Insurance helps with some important facts on what affects the cost of your insurance premiums.
Ontario Insurance Companies set their premiums based on historical data and relevant and current facts, about who and what they are going to be insuring. All of this data goes into determining the premium they are going to charge. The premium will reflect the risk based on similar characteristics which have been analyzed. The higher the potential risk, the higher the premium will be. The lower the risk, the lower the potential premium could be.
Insurance Companies depend on their Actuaries to set these levels of rates for auto insurance, homeowners insurance, business insurance and life insurance.
The example of insuring someone with a history of heart disease versus a person in perfect health will result in much different premium costs for their life insurance. This basis of risk analysis is used in most types of insurance and can be seen by looking at the cost of business insurance, comparing the premiums paid by the owner of a small accounting practice with no claims versus a snow plow contractor who regularly has claims.
Here are some of the factors which will help you to understand the cost of your various types of insurance in Ontario.
Homeowners Insurance / Condo Insurance factors affecting premium costs include:
The type of building material used and quality of construction
The replacement cost of the building and contents
Is the location of the home prone to flooding or wind damage
Is there a history of neighbourhood crime
How valuable are the items in the home
What is the proximity to a fire station, and
What are the applicable discounts for this risk and the deductible amount.
Auto insurance factors affecting premium costs include:
The safety and theft statistics for the area
Whether the client commutes to work
The year, make, and model of the vehicle
How many tickets and past at-fault insurance claims the driver has had
Years of driving experience
Available discounts, and
How much coverage is purchased and the level of deductible chosen.
The statistics from hundreds of thousands of drivers are compiled and then analyzed to determine the reliable indicators of risk. As an example, “being involved in a number of accidents in the past few years” doesn’t necessarily make you a higher risk or affect your premiums. But if it was determined that you were at fault in most of those accidents, you will be considered a higher risk and your cost of auto insurance would be higher than someone who does not have at fault accidents.
Being informed and understanding what goes into the cost of determining your Ontario insurance premiums will hopefully help you to keep the cost of your insurance down, by managing your own risks.