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Why are my insurance rates higher than my friend’s?

Auto Insurance

By Joanne Lemna | January 16, 2017

If you’ve ever discussed insurance coverage with your friends (or at least complained over the cost of it) you may have discovered that your car insurance rates are much higher than your friends. This is may cause some frustration – why would you be paying so much more? You’re the same age, may drive similar cars… so why are your rates higher?

Here are some reasons why your car insurance rates may be higher than your friend’s.

1) You live in different neighbourhoods.

One significant factor that impacts your car insurance rates is where you live. This impacts if you use your car to commute (and if so, how far your daily commute is) and insurance companies use crime rate and claim rate statistics from individual communities. Your rates may be higher if you live in an area with a lot of crime or you have a longer work commute.

2) Your driving record.

Even a few minor tickets can increase your car insurance rates – and a major infraction can account for a rise in premiums. If you have tickets and your friend doesn’t, this could be a factor in the price difference.

3) Your claims history.

Another significant factor is your claims history. If you’ve made multiple claims or been involved in an at-fault accident, you’ll likely be paying much higher rates than someone who has never made a claim or only made one.

4) How you use your car.

Does your friend only use their car on the weekend while you drive yours everyday? How often you drive and why you drive impacts your rates. Commuters will have to pay more as they drive during periods of the day where traffic accidents are statistically most probable. Also, drivers who put more time behind the wheel will pay more than people who drive less frequently. This is purely about rating risk by insurance companies.

5) Type of car you drive.

The vehicle you drive has a direct impact on your insurance rates. Unless you and your friend are driving the exact same year, make and model of vehicle, there will likely be some differences between your rates from this factor. This is because different cars have different repair costs, safety features, and likelihood of being broken into.

For example, the Honda Civic hatchback usually comes with a higher insurance premium but not all hatchbacks get tagged with this extra cost. The reason? Honda Civics are a popular car to steal. As a result, you and your friend may both end up driving similarly priced hatchbacks with similar gas mileage and performance standards but with completely different insurance rates.

6) Your insurance options.

When you purchase car insurance, you make a lot of choices that can affect your rates. This includes your coverages, limits and deductible. If your friend has bare-bones insurance, they will likely pay less than you if you have a comprehensive policy.

If you have questions or concerns about your car insurance rates, talk to your broker. They can explain your premiums and advise on how to lower your costs.


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