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Factors That Affect Car Insurance Rates

A lot of people really don’t understand the costs of their vehicle insurance. Those that are intent on finding the lowest rates will take the time to shop around. What they should also be doing is learning what factors play a role in setting the insurance rates. Then they can see if there is anything they can do about their personal circumstances to help get them cheaper premiums.

What Factors Determine Insurance Rates

insurance factors

The main factors are:

  • Driving record
  • The amount of driving that is done
  • Where the majority of driving takes place
  • The make and model of the car
  • What the deductible is going to be
  • The type of coverage
  • The amount of coverage required

Insurance companies are experts at setting the amounts they are going to charge for their premiums. They will take into account many different factors that pertain to each vehicle insurance applicant.

Driving Record

driving sedan

The driving record is going to provide the insurance companies with a wealth of information for each client looking for vehicle insurance. One of the most important pieces of data will be the driving history, which lets the company know how much experience the driver has. Obviously, a new driver will not have any history. Therefore they will be considered to be more high risk based on this alone.

Then age is going to be a factor as well. The older the driver is the more mature they are likely to be. Insurance companies use age statistics to determine what kinds of risks young drivers pose.

Then whether the driver is male or female is something else that is going to be looked at. As hard as it may be for some males to accept female drivers may get a lower rate.

The Amount Of Driving That Is Done

car dashboard

This makes common sense that Insurance providers would be interested in the amount of driving that is being done. The more that the car is on the road the more risks there are for an accident.

Where The Majority Of Driving Takes Place

It doesn’t matter how good the driving record is where the driving is done is going to be of interest. It is because city driving statistics show more accidents occur in this environment compared to rural or country driving. Then there is also a great chance of theft which may be another potential claim the Insurance company has to deal with.

Does the Type of Car Affect Insurance Rates

In the event, a claim is made the Insurance company has to pay for the repairs or the replacement. These can vary greatly according to the make and model of the car. Some high-end cars or imported cars are very expensive to repair. Also, some cars have a better safety rating compared to others. All of these metrics are going to determine what risks the Insurance company may face by way of covering costs.

What The Deductible Is Going To Be

Most insurance companies will offer options for different deductibles. These are the costs that the Insured is willing to pay in the event of a claim. In most cases the higher the deductible the lower the insurance premium will be.

The Type Of Coverage

File types

This is where insurance premiums become a little more diversified. Insurance buyers have options for additional coverage that they may want. The more they choose the higher the costs for the insurance.

The Amount Of Coverage Required

Not only does the insurance shopper have options for types of coverage, but they can also choose the amount of coverage they want. Naturally the more the insurance company may have to cover the more they are going to increase the premiums.

What Makes Auto Insurance Go Up?

The actions of the driver themselves and general statistics are two facts that cause auto insurance to go up.

The Drivers:

The cost of insurance may go up for a specific driver. It may be because something has had a negative impact on their driving record. They may have accumulated demerit points. They may have a DUI conviction. Or, they may have made too many claims.

In General:

Insurance companies will use statistics to determine a base premium rate to start with. If these statistics show an increase in something that can affect the insurance providers, then up go the insurance premiums. For example, they may notice an increase in a specific neighbourhood for increased claims. This may mean for those living in this area their insurance is going to go up the next time they renew

What Can Make Car Insurance Cheaper?

rate down

Looking at discounts and comparative shopping can make car insurance cheaper.

The good news is that there are several things that the driver can do to lower their insurance costs. They can begin by knowing what potential discounts may be available to lower the costs. They can then see if they can apply any of these to their driving habits. For example, an Insurance company may offer a discount for using winter tires. Or they may offer a discount for being accident-free for a period of time. A driver can look at all the discounts then go with a company that has the most discounts that apply to them.

Another step the insurance shopper can do is take the time to do some comparisons. There are quote sites that will do all the research for them. Then they will come up with a selection of insurance providers that are offering the shopper the best rates.

How Are Car Insurance Premiums Calculated

Car insurance premiums are calculated by taking the base premium based on statistics. Then taking the additional information about the driver to total up the premium costs.

This is the reason why so many insured clients have different rates even though they may have very similar circumstances. Every insurance company is different but they still all come to premium costs using standard methods. Then from this, they will determine what discounts they want to offer to entice new clients but still protect themselves.

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