Automotive

How are insurance premiums calculated?

  • Last Updated:
  • Jun 17th, 2018 11:01 am
[OP]
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Nov 12, 2011
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Niagara-on-the-Lake

How are insurance premiums calculated?

Just curious how insurance rates are generally calculated. I'm in Ontario and ran over some road debris back in January in a snow storm (it was hidden under about a foot of snow). I've been deemed 100% at fault. The repair to my car was $1500. Does this mean my premium will go up by $1500/year? Not familiar with how insurance rates are determined, so apologies.

I have no prior accidents, etc. Don't think I have accident forgiveness though.

Also, is it worthwhile asking to have the fault redetermined? Are cases such as mine where the object that was hit was not visible and not necessarily stationary usually deemed 100% at fault?
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Jun 26, 2011
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Each company will be different in terms of how the claim is surcharged on the policy. However, it's unlikely that the surcharge is 100% more. Accidents are rated for a period of 6 years. So for instance, some companies may charge a 55% the first two years, 45% for the next two years, 25% for the last two years.

Assuming the above and your original premium of $1500 and not accounting for any other increase/decrease (like ticket or regular increase), then your next year premium will be $2325 at 55% extra. Again, that's just a rough example and each company may be different.

Usually single car accidents are deemed at fault because...well..there's literally no one else at the scene. Insurance cannot chase after the road for causing damage, so you are considered to be at fault because they assume you are supposed to be driving safely and slowly enough to be able to steer away from danger. It's not always fair, but there's literally no one else that could be at fault besides yourself. Like if you hit a pole in a parking lot - it cannot be the pole's fault.
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Jan 15, 2017
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Typhoonz wrote:
Jun 14th, 2018 3:00 pm
Just curious how insurance rates are generally calculated. I'm in Ontario and ran over some road debris back in January in a snow storm (it was hidden under about a foot of snow). I've been deemed 100% at fault. The repair to my car was $1500. Does this mean my premium will go up by $1500/year? Not familiar with how insurance rates are determined, so apologies.

I have no prior accidents, etc. Don't think I have accident forgiveness though.

Also, is it worthwhile asking to have the fault redetermined? Are cases such as mine where the object that was hit was not visible and not necessarily stationary usually deemed 100% at fault?
From Fault Determination Rules

3. "The degree of fault of an insured is determined without reference to,

(a) the circumstances in which the incident occurs, including weather conditions, road conditions, visibility or the actions of pedestrians;..."

As stated earlier - you were the only one involved so you are at fault.
Newbie
May 30, 2017
36 posts
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Typhoonz wrote:
Jun 14th, 2018 3:00 pm
Just curious how insurance rates are generally calculated.
1. Classify risk based on types of insurance, the hazards of exposure, or both.
2. Determine the number and nature of rating classes, exercising a reasonable amount of discrimination to reflect the probable frequency of loss experienced by insureds of that class.
3. Select proper measure of exposure,
4. Gather loss statistics.
5. Predict future losses from data regarding past losses
6. Calculate pure premium from predicted losses.
7. Calculate total premium by adding on components such as development factors, trend factors, acquisition costs, administrative expenses, profit
8. Calculate the premium rate or unit cost of insurance by dividing the total premium by exposure unit.
Deal Fanatic
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Aug 11, 2008
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Ontario
impossible to answer.. if you were rated with the accident waiver protection and this was your first at fault, your rates will not be affected by this at all. General rate increases are not protected by this coverage.
if this is your first at fault without the coverage, and you're rated a 6 star, then you would renew at a 5 star.. if you are less than a 5 star and this is your first at fault, you could be renewed at a 0 star. Add tickets to that, you may not be renewed by your current carrier.
Typhoonz wrote:
Jun 14th, 2018 3:00 pm
Just curious how insurance rates are generally calculated. I'm in Ontario and ran over some road debris back in January in a snow storm (it was hidden under about a foot of snow). I've been deemed 100% at fault. The repair to my car was $1500. Does this mean my premium will go up by $1500/year? Not familiar with how insurance rates are determined, so apologies.

I have no prior accidents, etc. Don't think I have accident forgiveness though.

Also, is it worthwhile asking to have the fault redetermined? Are cases such as mine where the object that was hit was not visible and not necessarily stationary usually deemed 100% at fault?
RIBO LICENCED INSURANCE BROKER, over 30 years experience
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Aug 11, 2008
7927 posts
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Ontario
aint that the truth! lol
vkizzle wrote:
Jun 14th, 2018 3:48 pm
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RIBO LICENCED INSURANCE BROKER, over 30 years experience

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