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Increasing Liability Premiums +

My vehicle is getting older - worth less every year, but my insurance keeps going up. Why?

If you have an older vehicle and only carry liability insurance (PLPD),

- the premium you are charged is based on your age, years of experience and driving record.

- Liability is mandatory and ensures there is something (money) to take care of other people and their possessions in the event of an automobile accident.

Unfortunately, the cost of liability insurance has been climbing ...and will likely continue to do so. As legal decisions and out-of-court settlements for death and bodily injury caused by accidents rise, the insurance companies must adjust their rates - to generate enough income so they can pay claims when necessary.

However, if you carry physical damage coverage (all perils, collision, comprehensive and/or specified perils), the rates for that coverage are likely going down steadily. The value of the vehicle and therefore the amount the insurance company may be expected to pay out is lower, and therefore so is the premium.

Two main factors that would cause the price of physical damage insurance to increase on an older vehicle are:

1) If it is customized/restored, appraised and insured to the higher value.

2) If the make and model is considered a "higher risk."

Many companies have changed how they determine how much to charge for physical damage. In the past, the "rating group" was based solely on the value, or purchase price.

The CLEAR rating system (Canadian Loss Experience Automobile Rating) is based on tracking loss statistics by make and model of the vehicle.

Vehicles with more safety and loss prevention features have less likelihood of being involved in serious claims with high payouts. Higher powered, sportier models with less safety features tend to be involved in more expensive claims -both in regards to repairing or writing off the vehicle, as well as the medical and rehabilitation costs of passengers, pedestrians or others involved.

Many factors determine how much an insurance company will charge for coverage for your vehicle, and each company operates somewhat differently. If you have questions, ask your broker.