Vehicle Insurance

Do vehicle classifications impact auto insurance rates?

Insurance companies use all kinds of vehicle data to calculate their premiums, but classification doesn’t play a major role

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When it comes to buying auto insurance , vehicle details matter — and there are a lot of different ways to classify cars.

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Are you driving a sedan or a sports coupe? A compact crossover or a mid-size SUV? A motor vehicle or a passenger vehicle? All of these categories are used by governments to categorize the roughly 25 million registered motor vehicles in Canada.

Broadly speaking, there are four federal vehicle classifications the government uses when considering tax deductions:

  1. Motor vehicles: a vehicle “designed or adapted for use on highways or streets.” Pickup trucks without extended cabs for passengers, or a van used to transport goods or equipment would fall under this category. 
  2. Passenger vehicle: a motor vehicle that is “designed or adapted primarily to carry people on highways or streets” that seats no more than eight passengers. Most cars, SUVs, pickup trucks with extended cabs, and vans are considered passenger vehicles by the federal government. 
  3. Zero-emissions vehicles: automobiles that include plug-in hybrids or are fully electric or hydrogen-powered and meet the criteria outlined here.
  4. Zero-emissions passenger vehicles: passenger vehicles that are electrified or fully powered by hydrogen. A Tesla would fall under this category.

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But do these classifications matter when calculating your insurance premium?

“They do not,” says Ron de Pruis, director of consumer and governmental affairs at the Insurance Bureau of Canada.

De Pruis says the insurance industry uses the Canadian Loss Experience Automobile Rating , or CLEAR, to assess the probability of any particular make or model getting damaged or stolen. It looks at the makes, models, and years for a huge range of cars and light trucks sold across Canada and assigns them a score based on the average cost per vehicle for claims, including crashes, theft, and property damage.

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What types of cars are the most expensive to insure? 

CLEAR data show just how varied the claims rates are among the same category of vehicle — or, sometimes, among the same make and model. 

Take the 2003 Acura MDX four-wheel drive, an SUV model that rates far better than other vehicles, according to CLEAR data: it rates a 61 for collision claims, 44 when the risk of theft is included, and 62 for direct property damage payouts. (Any score lower than 100 is considered above average.)

Scroll down to another SUV, like the 2016 Honda Pilot 4WD, and you’ll find very different scores — 115 for collision claims, a whopping 202 for all claims including theft, and 127 for direct property damage payouts.

That said, the data shows — surprisingly — that some older models of SUVs and four-door sedans are actually rated better than newer versions. The 2015 Acura MDX rates a 79 for all claims including theft, but a measly 115 for crash claims and a whopping 175 for direct property damage payouts. And electric vehicles don’t fare particularly well on CLEAR because their components are harder to find, or mechanics may not be qualified to fix them (de Pruis says Tesla scores can hit the 600s).

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Safety features and repair costs

De Pruis says safety features can affect whether a particular make or model is rated worse than another. “Vehicles that have anti-lock brakes, dual inside airbags, side impact door reinforcements, anti-theft devices — they would have a better CLEAR rating than vehicles that may not have these types of features,” he explains.

The risk of theft is crucial. While the 2018 Honda CR-V SUV ranked as the most-stolen car in Canada this year , luxury brands like Mercedes-Benz and Audi are far more expensive for insurance companies to pay claims on — so they tend to be rated higher than, say, a Honda or an Accord.

Another factor is ease of repair. BMWs , de Pruis says, require mechanics to take special courses and use proprietary tools for repairs, while Hondas and Toyotas are far easier to fix. Electric vehicles like Teslas  have far fewer moving parts than their internal combustion engine counterparts, but are not easily repaired.

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De Pruis stresses that the make and model of a vehicle is far from the only factor CLEAR uses to rate vehicles, and subsequently, insurance companies use to set premiums. 

“It just gives an indication of where your vehicle would compare to an average,” he says. There are a lot of other factors to consider when shopping around for insurance, such as your age, your gender, where you live, and the amount of driving you do.

LowestRates.ca  is a free and independent rate comparison website that allows Canadians to compare rates from 75+ providers for various financial products, such as auto and home insurance, mortgages, and credit cards.

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