Is Your Vehicle Costing You More on Insurance?

Friday November 23, 2018

Category: Finance | Insurance

Learn about Canada’s CLEAR system and how vehicle rate groups can affect your insurance premium.

In our last article, we discussed the factors that determine your insurance rate. In this article, we’re going in depth on one of those factors – the vehicle you drive.

A combination of factors determine your insurance rate. These factors include your profile as a driver, your location, the coverage you choose and your deductible. In addition to these factors, the vehicle you are insuring affects your insurance rate.

What is the CLEAR system?

When evaluating your potential risk, insurers will check your vehicle’s Canadian Loss Experience Automobile Rating (CLEAR). According to the Insurance Bureau of Canada (IBC), the CLEAR rating system is:

“…accurate and credible assessment of the expected and actual claims loss experience for each make, model and model-year of private passenger vehicle. ​”

Actual claims data, collected from insurers annually, informs each vehicle’s rating. The data considers the number of claims expected, the total cost of those claims and the likelihood of the vehicle will be stolen.

The purpose of CLEAR is to establish a value that indicates a specific vehicle’s risk, assuming all other factors are the same.

The IBC touts that the CLEAR system encourages manufacturers to creative safer vehicles that cost less to repair and discourage theft.

How does the IBC establish CLEAR ratings?

To establish ratings, the data collected is first adjusted to compensate for non-vehicle factors that affect claims data. These factors include individual driving records, location and vehicle use. Next, using statistical estimates, ratings are set for newer makes or model-years when there is little or non-existent data.

Insurance Bureau of Canada

Then, the data for existing vehicle and model-year combinations is updated to reflect actual claims costs. Finally, the data is adjusted to mitigate against drastic year over year increases and the rating groups are established. Insurers then use these rating groups to calculate your insurance rate.

For more details on the process, you can review the IBC’s methodology here.

Vehicle Rate Groups & Insurance Rates

After the various makes, models and model-years are assigned a CLEAR value, they are organized into vehicle rate groups. The higher the value for a rate group, the higher your insurance premium may be. Conversely, if your vehicle falls into a rate group with a lower value, you may save more on your insurance.

However, it’s important to keep in mind that even if your vehicle rates positively, it does not guarantee your premium will be low. Your driving record, location, coverage and deductible all still play an important role. For example, you may drive one of the top-rated vehicles but if you have missed payments or a record of tickets, accidents or suspensions, you will pay more.

How does your vehicle measure up?

CLEAR vehicle rate groups are not available online. However, the IBC does publish ratings for various claims types for the most popular vehicles in Canada. The report, “How Cars Measure Up” includes a rating for the following categories with 100 as the average in each:

The available tables can be viewed here. Vehicles with multiple green boxes are likely to offer better savings on insurance.

So, if you’re in the market for a new car, it’s a good idea to call your broker and find out how your choice can impact your insurance rate. 

To find out your vehicle’s overall CLEAR rating, call Easyway today.

CALL NOW 1.866.388.3034

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