How Auto Insurance Rates Are Calculated

Father, son, and dog hanging out of the window of a moving car

Let’s face it – Edmonton is a driving city. While there is the Metro Line and bus service, having your own car or truck is still the most efficient way to get around the city. Throughout Alberta, there are scenic routes and recreational areas, as well as the hazards of winter driving and wildlife on the road.

With this many options, opportunities, and distractions, there are a number of items to consider before purchasing car or truck insurance. At Capital Insurance Brokers, we want you to get the best value for the services you require, and offer these insights and tips into buying auto insurance.

Determining Cost

There are two main steps that brokers complete that will ultimately determine what you’ll pay for auto insurance.

1. Underwriting

This is an assessment of the risk associated with a particular applicant. The details of the applicant are grouped with other similar risks to decide if the company will accept the application.

2. Rating

Based on the results of the underwriting process, a rating is assigned. This rating assigns a price based on what the insurer believes it will cost to assume the financial responsibility for the applicant’s potential claim. Each company adopts its own rating system, although there are general guidelines that all companies follow.

Factors The Affect Your Rating

  • Claim frequency. This is the single greatest influence on the rating process. It measures how often an insured event occurs within a group relative to the number of policies contained in that group. Persons sharing characteristics with high claims groups will be charged more for insurance coverage.
  • Driving Record. Drivers with previous violations or accidents are considered to be higher risk
  • Geographic Territory. Urban areas have more claims than rural areas, so you’ll probably see higher insurance costs in cities.
  • Gender & Age. Males tend to have more accidents, and certain age groups have been found to file more claims.
  • Marital Status. Married couples will see lower rates because they have been found to show lower rates of claims.
  • Prior Insurance Coverage. If you have a history of not paying your premiums, you’re going to see much higher rates.
  • Vehicle Use. Higher annual mileage results in higher exposure to risk, which means higher premiums.
  • Make & Model of Your Vehicle. Luxury and sports cars average a higher number of claims, which means higher insurance rates.


Don’t forget to ask about optional coverage and any discounts that might apply to you. Some common discounts include:

  • Multiple vehicles
  • Driver education courses
  • Good students
  • Safety devices
  • Anti-theft devices
  • Low mileage
  • Good driver/renewal
  • Auto/home package

In the Market For Auto Insurance?

An auto insurance policy is a legal contract. It is written so your rights and responsibilities, as well as those of the insurance company, are clearly stated. Always make sure you read and understand your policy. If you are shopping around for auto insurance give the team at Capital Insurance Brokers a call! We are happy to answer any questions you may have.

CLICK HERE to start a free, no-obligation online auto insurance quote. Or, call one of our live agents at 780-476-1600 or toll-free at 1-877-476-1601