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There are several factors that affect the rates of auto insurance. These factors include the model of car that you have, the type of auto insurance coverage you applied for, and, of course, the economy. Although many people think that the economy has no direct effect on auto insurance, it actually has.

Effects of the economy on auto insurance rates

If the economy is not stable, car insurance companies usually hike up existing premiums in order to earn the amount needed for claim payments. During this time of economic recession, many drivers do not apply for car insurance even though it is required in almost all Canadian provinces. Because of this, many auto insurance companies won't be able to get the money they need for claim payments. Their last resort is to increase the existing premiums.

Other factors that affect your insurance rate

Aside from the current economic situation, other factors that influence your auto insurance premium are your credit rating and the model of your car. The latter is determined by the frequency of accident and theft associated with your car model.

With the recent economic recession, you can expect the surging of auto insurance premiums. However, there are plenty of ways to save on your insurance. One of these is by requesting for higher deductibles. If you have higher deductibles, you'll be able to enjoy lower insurance premiums. Another tip is to equip your car with safety gear and theft-prevention devices since some insurance companies offer discount for cars with safety gear.