Getting the right car insurance shouldn’t be complicated, but understanding it can be. Here, Pete Karageorgos of the Insurance Bureau of Canada (IBC) gives us easy-to-understand answers to some complicated questions.

Q: Why does where I live affect my insurance?

A: “Where you live is just one factor insurers consider when determining your rate,” explains Karageorgos. “And that’s simply because some areas have greater claim costs than others.” If you live in an area that has a greater risk of accidents and damage (for example, a high-density urban area rather than a smaller town), then that can translate to higher premiums and claim costs.

Q: What is it about a car that affects my premiums?

A: Insurers use the Canadian Loss Experience Automobile Rating (CLEAR) system to track the average size and frequency of insurance claims for most makes and models. Insurers use this data to rate vehicles based on their safety record and the cost to repair or replace them, and predict future claims. Buying a car with a higher rating will likely mean a higher insurance rate. Learn more about CLEAR here.

“The good news is that safety features and anti-theft devices — even after-market ones — may reduce your insurance premium. Ask your insurance company for details before investing in any,” he advises.

Q: Does my policy automatically cover everyone in my household?

A: No. You must declare the principal driver and all licensed drivers who have access to your vehicle. “Since the best drivers get the best rates,” says Karageorgos, “one driver in your household can affect your rate.”

Q: How can I be smart about my deductible?

A: The deductible is the portion of your claim that you pay before your insurance company contributes. So if you have a $500 deductible for vandalism/fire/theft and someone slashes one of your tires, replacing it will cost less than $500 so you won’t file a claim. “Raising your deductible will reduce your insurance rate because you’ll only be using your insurance for bigger events — not for a dent or broken taillight,” explains Karageorgos. Your insurance company can help you determine how to best adjust your deductible.

Q: What happens if I lend my car to a friend and they have an accident?

A: “In the majority of cases, if you’re lending your car to someone, you’re also lending them your insurance record,” explains Karageorgos. “If your car is in a collision — even if you’re not in it — your insurance coverage applies and the collision will reflect on your insurance.”

Q: How often should I review my policy?

A: “Take time on an annual basis to look at your coverage and go over it with your insurance company,” he says. This way, you can review any limitations and/or exclusions in your policy.

“Check to see if you’re eligible for any discounts and to see what happens if you increase your deductible or reduce your collision coverage,” adds Karageorgos.

(Note: Collision coverage is optional in all provinces except BC, Manitoba and Saskatchewan. However, in those provinces, due to provincial legislation, insurance companies do not offer auto insurance).