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Does the car you buy affect your insurance rate?

Oct. 22, 2012 - in Advice, Information, Insurance

So you’re buying a car and you’ve got your eye on that sleek red Honda, but how will the car you buy affect the cost of your insurance. Car insurance costs can seem like a random generated number based on unknown factors, but the way in which insurance companies determine your coverage is actually fairly clear cut elements – none of which is the colour of the car you buy. While colour is important to the owner, insurance companies don’t base their rates on your preferred hue.

The following are factors which can affect your insurance rate:

The year of your car – The year of your vehicle is a factor in how much you will pay, though certain newer vehicles are eligible for a new car discount depending on your insurance provider.

The make of your car – Your car manufacturer can affect the cost of your insurance as the make will signal the value of hte vehicle. Is it foreign or domestic? Foreign cars tend to cost more to insure due to the fact that parts are harder to get.

Your car Model – Putting all the bells and whistles into your car will up the purchase price as well as your insurance rate. Higher end models tend to be more expensie to insure while the base model four door is usually the cheapest option for insurance purposes.

Vehicle Safety and Theft Features – Having a safer car will obviously work in your favour when insurance shopping. Older vehicles without standard safety features like airbags will have higher rates. Further, a car equipped with an alarm may be eligible for an insurance discount on most policies.

The Number of Vehicles you Insure – Those who insure more than one vehicle on their policy may be eligible for a multi-car discount which will apply to each insured vehicle.

The amount of coverage you purchase – The more coverage you purchase the more your insurance will cost. Deciding your coverage may require the help of an agent to determine the right amount for you.

While Insurance companies will also take into account the specific driver, how the vehicle will be used and the geographic location of the policy holder, the car you buy can definitely impact the rate you’ll pay.

For more information on how insurance rates are determined visit the Insurance Bureau of Canada. www.ibc.ca