car insurance rates

What factors determine auto insurance rates?
Insurance companies base their premium rates on the amount of risk an insured pose. The greater the risk of an insured filing a claim that the insurance company will have to pay, the more premium the company will charge that individual. Many of these risks are based on the individual person seeking coverage, while others are based on statistics and trends.

The most obvious factor that determines your auto insurance rates is your driving record. The more speeding tickets and accidents you have, the greater your risk of insuring and, thus, the higher your rates. This is why many companies offer motorists the opportunity to lower their rate by installing an in-car device that monitors driving habits.

Also, some companies may forgive a single accident or violation if you’ve had a clean record for several years, while others will raise your rates after just one incident. Drive carefully and you’ll be able to keep your insurance rates down. Who you are will determine your auto insurance rates. Even if you have a spotless record, you may pay more than others based on demographics that insurance company data shows carry a greater risk: Age. The older you are, the more experience driving you have and the less risk you bring. From age 16 to about age 25, drivers will pay much higher rates. Provided they get through those early years with a fairly clean record; those rates will moderate.

In some cases, rates will increase again once a driver reaches senior citizen status because older people lose some of their driving skills and become higher risks. Gender. Statistically, women drive safer than men. As a whole, accidents involving women drivers lean toward fender benders that cost little to repair, while men are typically more involved in high-speed and high-cost accidents. Therefore, men typically pay higher premiums than women. Marital status. Statistically, married drivers are less likely to cause accidents than single ones and will, therefore, pay less for their auto insurance. Credit status.It seems odd that a person’s credit score can affect his or her auto insurance rates, but some companies will take this into account.

People with solid credit tend to be less risk than those with bad credit scores. Those with financial trouble also tend to file claims for small amounts of damage, which people who are financially stable will cover those costs out of their own pocket. What you drive matters Certain types of vehicles carry more risk than others.

Sports cars are more likely to be involved in accidents, more likely to be stolen, and more expensive to fix than family sedans and minivans. Cars with better crash test ratings will help lower your rates. Another factor about your vehicle that insurance companies will assess is its engine size. The bigger the engine, the faster the car can travel and the more likely it will be in an accident.

Companies will also look at the potential damage your car can inflict on another; therefore, you will pay more for liability insurance on a large SUV than a compact. Where you live and drive will also impact rates because most traffic accidents occur close to home. Where you live greatly impacts your car insurance rates. People who commute in heavy traffic each day carry a higher risk than those whose daily drive is confined to a small town. People who frequently drive in economically depressed areas also bring greater risk because there may be a higher incidence of uninsured drivers who can’t afford insurance.

Living and/or working in high-crime areas brings greater risk of theft or vandalism. Mother Nature can also affect your rates: If you live in areas where you drive in snow a lot orif your car is potentially exposed to hail damage from summer storms, companies may charge more. Finally, the cost of living in your area will impact your insurance rates. The more it costs to repair a damaged vehicle, the more you will pay for auto insurance.

How and how often you use your car are also factors When underwriting a potential insured, companies will also determine how much a person drives and for what purpose. It stands to reason that the more often you’re behind the wheel, the greater the risk of having an accident than somebody who only drives a few miles a day to run errands. Companies will also charge a premium if you use your vehicle for work beyond just your commute. For example, delivering pizzas or packages using your own car creates greater risk of being in an accident. Likewise, journalists who use their own cars to drive to interviews and salespeople who cover large territories will likely pay higher auto insurance premiums.