Seeing CLEAR-ly

Q – What is the CLEAR vehicle rating system? How does it work? – A.N.

A – CLEAR is the Canadian Loss Experience Automobile Rating system, a mechanism for rating vehicles for insurance purposes. Insurers take into account the claims experience of a particular vehicle (make and model) when they calculate your premium. This differs from the previous practice of using the manufacturer’s suggested list price (MSLP) as the basis of your premium.

This system enables you to control your premium expense. Look at it from the point of view of the insurance company. Models that have fewer safety features, are stolen more often, or cost more to repair will cost more to insure.

Consider safety features such as air bags, antilock braking systems (ABS), and theft deterrent devices. While they can add substantially to the initial price of a vehicle, they may nonetheless translate into lower premiums for car owners, since these devices can help to reduce insurers’ claims costs.

For argument sake, let’s say that you and your neighbour both own cars that cost $35,000. Under the old system, both ca would be rated the same for insurance purposes. Easy enough to follow, yes, but not fair. If one of the cars is stolen more frequently, is less roadworthy and thus involved in more collisions, and/or costs more to repair, is it fair to charge each owner the same amount for their insurance? Clearly not, especially from the perspective of the owner of the safer car. Under CLEAR, motorists who drive safer vehicles, that are less expensive to insure, do not subsidize those driving vehicles with a higher loss experience.

So before you sign on the dotted line for that racy little number you’ve been eyeing, ask your insurer what the CLEAR system rating is for your dream car. It just may turn out that the insurance cost will be nightmarish. – G.P.N.