How Automobiles Are Rated

There's a complex formula behind every auto insurance premium that takes into account your vehicle's safety rating, your driving record, where and how often you drive and, of course, the amount of coverage you want and any discounts that apply to you.

The Insurance Bureau of Canada (IBC) rates specific groups of vehicles and their associated risk in order for insurers to determine premiums. This process is known as the Canadian Loss Experience Automobile Rating or CLEAR.

CLEAR uses historical data to calculate the relationships between the characteristics (such as body size, price, wheelbase, horsepower and theft-deterrent systems) of a particular make and model. It also takes into account claims filed for that model. The value is then adjusted every year.

In a province (such as Yukon, Northwest Territories or Nunavut), your CLEAR rating could affect as much as 40% of your auto insurance policy premium.

CLEAR Rating

CLEAR takes two factors into account to determine its portion of insurance premiums:

1. How likely it is that the vehicle will be involved in a claim; and
2. What the vehicle will typically cost to settle each claim.

Not only does CLEAR give insurers a better idea of future claims, it also helps drivers like you make more educated and informed decisions when purchasing a new vehicle. Read the IBC's brochure How Cars Measure Up to learn more about how the rating affects your auto insurance cost.

Speak to an insurance broker to find out more.

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