How Much to Budget for Car Insurance

Jun 8, 2024 | Blog

Car insurance is usually on the highest costs of owning a car. When purchasing a car, people are usually more concerned about car loan payments, maintenance, or gas. While these costs need to be considered, there are additional costs such as insurance. Ignoring additional costs such as insurance can lead to budget overages which can impact your finances. So it makes sense to ask, how much to budget for car insurance.

How Much to Budget for Car Insurance

When you are thinking about how much to budget for car insurance there are several factors you need to consider. Insurance companies take several factors into consideration when providing a quote.

Insurance Rating

If you are purchasing a car, you need to do some research. Always check the insurance rating of the car, one of the factors insurance companies use is a rating system that helps them determine the premium. For this, you should go to the Insurance Bureau of Canada, which measures the cost of collision, comprehensive, direct compensation property damage, and accident benefit claims. These indexes are then highlighted green, yellow, and red, with green being the best and red the worst.

Impact of Address

Insurance companies also factor in your address. Geography plays a role in insurance premiums; premiums can fluctuate wildly depending on your postal code. Cities or neighbourhoods with higher collisions or thefts lead to higher costs.

Age of Driver

Insurance companies take into consideration. A young driver with little driving experience is likely to pay higher premiums than an older individual with more time behind the wheel. However, your driving record also comes into play, a clean driving record will obviously lead to lower costs.

Vehicle Safety

Car safety matters as well, insurers are concerned with liabilities they may face in case of an accident. Always check the car safety rating, it is important not only to reduce premiums but also you want to buy the safest car available within your budget.

Car Use

Insurers are also interested in what and how you will use the car. If your car is going to spend most of the time on the road then the risk of an accident will increase, that is why you will see a question about the expected distance to be driven.

Compare Insurance Quotes

It is always a good idea to shop around and get quotes. Don’t buy insurance from the first insurer you reach out to. Check out online insurance quotes and compare the premiums, websites such as Insurance Hotline and Rates.

Understanding what impacts your insurance premiums and comparing different quotes is a good place to get an idea of how much to budget for car insurance. Checking insurance rates before buying a car will ensure that you can stay within your budget and there are no surprises. Once you buy a car there is not much you can do about insurance premiums. Research is key to knowing how much to budget for car insurance.