How Are Car Insurance Rates Determined

Each insurance company has its specific way of determining how much a person should pay for their auto insurance services. But generally, they have the same factors to analyze. Find out how are car insurance rates determined and use our website to get car insurance quotes free.

In order to determine the price, every insurance company will analyze the info provided by the potential client and will assess a risk profile. Each company then applies a series of formulas and calculates the cost, according to each factor.  The most important factors are:

  • # images (7)One of the most important points to note in this calculation is the past driving history. If you are one of those drivers who get speeding tickets or have earlier made claims for auto insurance, you can expect to be charged a higher premium. Slow and careful drivers, with no accident history, usually enjoy low premiums.
  • Age and gender. It is believed that the more the age of the driver, the more will be the experience and less will be the chances of having an accident. So with age the premium may decrease. Women are also considered to be safer drivers and that is also taken into account. Additionally married people are considered to be more responsible and there by less risky for the insurers.
  • The vehicle itself is also a determining factor in the insurance. A more expensive vehicle will also need more money for repairs. So you will have to pay a higher premium for such a vehicle.
  • Your area of residence. If you live in an area that has regular cases of thefts or accidents, then you will have to pay a higher premium.
  • The actual mileage is also important for this calculation. If the car is driven around more, the chances of having an accident also increase. To reduce mileage and thereby premium use car pool more often.
  • The model of the car. If the model of the car has been rated very well in the crash safety test then you will have to pay a lesser premium than someone who is driving a flashy car that has not got such a good rating.
  • The amount of coverage that you take determines the premium amount.

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