Allstate Canada explains what determines home and car insurance rates

Insurance rates demystified

TORONTO – April 10, 2012 – Seventy-one per cent of Canadians admit they are not very familiar with their insurance policies, shows a study by Allstate Insurance Company of Canada, and this confusion can lead to people not having enough coverage or not getting the full benefits of their coverage when they need it most. Allstate Canada believes that Canadians can make better decisions about their home and car insurance if they better understand how rates are calculated.

“Predicting the future with any accuracy is not an easy task, but that is exactly what insurance companies must do for all Canadians to be protected,” says Saskia Matheson, spokesperson for Allstate Canada. “The information we gather from customers, such as what kind of car they drive and how far they drive each day, helps us to make the best predictions possible.”

For example, while the purchase price of a full-size luxury hybrid SUV may be significantly higher than a standard pickup truck, the difference in the cost of insuring one vehicle compared to the other is actually quite small. Luxury SUV�s are equipped with advanced technology that can assist drivers while on the road, and their safety features also provide more protection which means passengers are less likely to be injured in the event of a collision. A standard pickup truck not equipped with the technology or safety features of a luxury vehicle will be cheaper and easier to repair if a collision takes place, but it will not provide the same level of protection to passengers.

What determines car insurance?

There are two main categories when an insurer like Allstate Canada sets a car insurance quote: you and your car.

The Driver

  • Experience: A good record of collision-free driving will help lower insurance rates. Insurance companies will consider a driver�s record, including the number of years he or she has been licensed and accident free, whether there will be multiple drivers on the vehicle and if the car will be lent or borrowed, among other factors.
  • Environment: How and where a driver is driving will also affect insurance costs. Does the driver live in a rural or urban area? Will the car be driven on a gravel road or on a highway? Will the driver use the car daily, for business or just for pleasure?
  • Policy: In addition, a driver�s deductible, liability limit and any additional coverage will factor into the cost.
  • Appetite for risk: Speeding tickets, collisions, fender benders or a history of convictions will increase the cost to insure the driver.

The Car

  • Type, year and safety rating: How much a car costs to repair, how likely it is to be damaged in an accident, as well as how safe the car is for its occupants are all factored into the cost of insurance. While two cars may cost the same amount of money, their safety features-or lack thereof-can mean a significant difference in insurance.

Most Canadian insurance companies use the Vehicle Information Centre of Canada, which collects data from insurers across the country to classify cars by cost to repair, risk of damage, passenger safety and history of theft, to calculate insurance rates. More information on how car insurance is calculated can be found at How Cars Measure Up.

What determines home insurance?

“A home is among the largest financial commitments a person will make, and the best way to protect it is to understand what your home insurance covers and what options are available to you,” says Matheson. “Plus, understanding how the premiums are calculated will inform you as to how much coverage is needed.”

Similar to auto insurance, Allstate Canada considers the home and the homeowner to determine home or tenant insurance premiums.

The Homeowner

  • Policy: How much coverage is enough depends on how large your home is, how much it would cost to rebuild, and of course how much and what kind of belongings are in the home. Taking the time to consult an insurance professional is the best way for homeowners to decide what coverage they need. A homeowner�s checklist can help keep track of the more expensive items and highlight belongings that may require additional coverage.
  • Use of home: Do you operate a business out of your home? Are you renting out an apartment?
  • Type of owner: Does the homeowner keep up with mortgage payments and maintenance of the home?

The Home

  • Type of home: Apartments, condominiums, semi-detached and detached homes are each considered separately because of size and possible threats to the home and its residents.
  • Features of home: Older homes that have not been upgraded will be more expensive to insure. Electricity, wiring, sources of heat, the condition of the foundation and roof are all important considerations. Whether or not the home has a security system can also factor in.
  • Location: Some neighbourhoods have higher theft rates or are in low-lying areas with a higher likelihood of sewer backups. Other areas are at risk of wildfires, tornados, high winds and hail storms.

“Of course there are factors, like natural catastrophes and the increasing costs of fraud, that affect insurance rates, because unfortunately, when claim rates go up, insurance companies are forced to increase rates to cover the costs,” says Matheson. “The important thing to remember is that the more transparent and accurate you can be with your agent when talking about your protection needs and concerns, the more accurate both the rate and the discounts can be that are applied, and most importantly, you will get the right coverage for you.”

To find out more about calculating insurance, visit

About Allstate Insurance Company of Canada

About Allstate Insurance Company of Canada
Allstate Insurance Company of Canada is one of Canada�s leading producers and distributors of home and auto insurance products. “The Good Hands Network®” enables consumers to contact Allstate Canada through one of 92 community-based Agencies, directly online at and through the Customer Contact Centre at 1-800-Allstate . Allstate Canada is committed to making a positive difference in the communities in which it operates. This year, Allstate Canada celebrates 25 years of partnership with MADD Canada in the effort to protect us all from impaired driving. In 2010, Allstate Canada, in partnership with the National Hockey League Players� Association (NHLPA), created the Allstate All-Canadians program, a mentorship program designed to create future community leaders through the sport of hockey. Learn more about this program at To learn more about Allstate Canada, visit