Tips from The Co-operators

How insurance rates are calculated

Do you ever wonder why your premiums sometimes change? Or why auto and home quotes are different from one insurance company to the next? There are several factors involved in determining who pays what rate.

What are risk levels?

Insurance rates are set based on risk, or the likelihood that someone will be involved in a claim. The greater the risk,

the higher the premium. The lower the risk, the lower the premium. To set rates, actuaries study the claims history of groups of people with similar characteristics. They then add information about your particular history to determine the exact premium.

For example, home insurance rates depend on factors including:

  • whether your neighbourhood is prone to sewer backup
  • the crime rate and claims history in your neighbourhood
  • how close you live to a fire station and fire hydrant
  • the value of your personal property
  • your insurance history

Auto insurance rates reflect:

  • the driving experience of people in your age group
  • safety and theft statistics for your area
  • the safety features and statistics of your vehicle
  • the year, make and model of your vehicle
  • whether you commute to work or use your car for personal or business purposes
  • how many driving offences you’ve had, including past at-fault insurance claims
  • how many years you’ve been driving

What you pay for your insurance coverage also depends on the discounts you qualify for, how much coverage you decide to buy, and the deductibles you choose.

Federal and Provincial regulations apply:

Government regulations, taxes and the cost of health care also affect rate calculations. As these costs change, so do premiums. Rates can also be affected by increased court awards, towing fees, repair costs, insurance fraud, and more frequent and severe storms.

Understanding the basics of how premiums are calculated means you’ll be better able to choose the coverage you need. For more answers to common insurance questions, connect with us today at

The Co-operators® used under license from The Co-operators Group Limited. Group Auto and Home products underwritten by COSECO Insurance Company and administered by HB Group Insurance Management Ltd, member companies of The Co-operators Group Limited. Discounts, coverage and eligibility vary by province. Auto insurance not available in British Columbia, Manitoba and Saskatchewan. The Co-operators is committed to protecting the privacy, confidentiality, accuracy and security of the personal information collected, used, retained and disclosed in the course of conducting business. To learn more, visit
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