It may seem like a mystery to some motorists what affects car insurance, but there is a rhyme and reason to how car insurance companies calculate your insurance rates. In fact, insurance companies most often use a mathematical algorithm to decide what rate a certain motorist should receive by entering their information into a database, which then calculates a corresponding auto insurance quote. Though some are less obvious than others, there are a variety of standard industry factors that help companies decide who should receive a high or low car insurance quote.
Knowing these factors will help you know what to expect from your insurance company, and even save you money. Some of the most common factors taken into account when issuing an insurance quote are:
1. Your Driving Record
This is probably the most important factor in how much a car insurance company will charge you for coverage. If you have multiple moving violations, accidents or a DUI, insurance companies will see you as a risk, and will raise your premium. This is especially true if you have more than one violation a year or a DUI. If you have a DUI, some insurance companies will refuse to cover you.
2. How You Plan on Using Your Vehicle
Depending on how much and how far you drive your car, you will see a direct effect on your auto insurance rates. Furthermore, certain car models are also seen as a greater risk. Auto insurance companies take all of these factors into account when coming up with a car insurance quote.
3. Your Age and Gender
Although you have no control over how old you are (or your gender) these aspects do play a major factor in your car insurance rates. It may seem unfair, but keep in mind that these are only two factors. The cold hard truth is that young motorists are more likely get in accidents, and young male motorists are even more likely to get into accidents.
4. The Amount of Coverage You Buy
Many insurance companies will let you “bundle” insurance together for better deals. For example, if you buy homeowner’s insurance and car insurance through the same provider, you can often get a discount. You should always ask your provider if you can combine insurance plans, and about any other discounts you may be eligible for.
5. Your Credit History
Statistics have shown that there is a substantial connection between a motorist’s credit history and the number of claims in their driver history. If a driver has a high credit score, they will usually receive lower insurance quotes.
6. Your Location
Where you drive—or do the bulk of your driving—can have a definite impact on your car insurance quotes. If you live in a rural or urban area with high crime rates and more accidents, then you can expect to pay a higher monthly premium.
7. Your Marital Status
Statistics have shown that people who are married typically file fewer claims than those who are single.
8. Your Prior Coverage
If you have shown yourself to be a loyal customer—either to your current company or to a prior company—then you may be able to get lower rates. Insurance companies want to keep good customers. If you are renewing your insurance plan, ask your provider if you qualify for a discount, and don’t be afraid to share any competing quotes from other companies. Chances are they will try to match it, rather than lose your business.
Though this is in no way an exhaustive list, the points above are standard auto insurance industry factors used to decide a certain motorist’s insurance quote. If you have any questions, you should always engage in a dialogue with your provider. The more you are aware of what you can do to lower your rates, the more likely you will reach your financial goals.
About the author: Jenni Sunde is a freelance fashion writer and pop culture junkie. Jenni specializes in all things lifestyle-related. From home and design to health and beauty. With her love of art and all things beautiful, she delights in sharing her sense of style from her life to your computer monitor. Her title pegs her as an editor at a website that specializes in providing people with car insurance quotes, but her passion leads her into writing with a little more substance and a lot more heart.
Photo credit: mendhak
