How Auto Insurance Rates Are Determined | Farrell Agencies

How Auto Insurance Rates Are Determined

Posted by Farrell Agencies on May 2, 2020

How do insurance companies calculate your vehicle insurance? It may be surprising to learn that auto insurance rates aren’t constructed using indiscriminate numbers. There are, in fact, several variables that are used to determine how much you pay for your vehicle insurance.

In Saskatchewan auto insurance is compulsory for all drivers. The province employs a mandatory vehicle registration and insurance program called the Saskatchewan Auto Fund, which is administered by SGI (Saskatchewan Government Insurance). Auto insurance can be purchased directly from SGI or a private broker. In order to calculate your auto insurance premiums, the following factors are considered:

  • Vehicle Type
  • Driving Record
  • Vehicle Class
  • Type of Coverage

Vehicle Type
The type of vehicle you drive is an important variable in determining rates. As of 2017, SGI began using the Canadian Loss Experience Automobile Rating (CLEAR) to calculate Saskatchewan auto insurance rates. The CLEAR system evaluates each type of vehicle (make, model, year) based on the expected number of claims and cost per claim for each type of vehicle. Replacement and repair costs for each specific vehicle will be used to determine rates. The probability of theft is also factored in. For example, a minivan with higher safety ratings will likely result in lower insurance rates. High-end vehicles, on the other hand, will usually have higher insurance rates because of their increased likelihood of being stolen.

Driving Record
Your driving experience on the road is a factor that will influence your premiums. An individual with minimal driving experience will be priced differently than someone who has been driving for years. However, depending on your record, you may receive a discount or surcharge. The Safe Driver Recognition (SDR) program rewards drivers with few driving infractions with a discount on basic insurance coverage. Risky drivers, or drivers who have incurred demerit points, are required to pay higher rates.

Vehicle Registration Class
Vehicles are separated into different classes based on vehicle type and use, and rates vary depending on vehicle class. Private passenger vehicles, light vehicles and farm vehicles are used for different purposes and therefore have different rates. For instances, farm vehicles tend to travel fewer kilometres and have fewer collisions. Therefore, they generally have lower registration fees and insurance premiums.

Type of Coverage
In Saskatchewan, third-party liability, collision, and comprehensive coverage are mandatory for all drivers. There are also additional types of coverage that reduce basic deductibles and increases third-party liability, which are available through both SGI and private brokerages. The most common additional coverages are increased liability coverage, loss of use coverage (the cost of renting a vehicle if your car is stolen), wildlife coverage and road hazard glass coverage. Therefore, your total cost of auto insurance will depend on whether to purchase additional coverage and which types of coverage you select

Factors Not Considered
Contrary to what many people believe, a driver’s age, gender or where they live are not used to determine car insurance premiums in Saskatchewan. The Saskatchewan Auto Fund operates under the belief that all drivers are equal unless their driving history demonstrates that they are of a greater risk.

There may be several ways to save money on auto insurance. Talk to the professionals at Farrell Agencies to see what options are available to you. And before purchasing a new or used vehicle, be sure to review the SGI’s rate calculator to see how much auto insurance will be for the vehicle you are considering.

For more information on auto insurance or any motor licencing questions, contact the team at Farrell Agencies.

PO Box 758
131 Palliser Way
SK S3N 4C6

+1 306 783 4477
+1 800 268 3675
Fax +1 306 786 7577


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