10 Factors That Determine Your Car Insurance Rate

Thursday, December 27, 2018

When you are shopping for car insurance, you are required to fill out a detailed application and provide your personal information; then you will be given a quote. Insurance quotes might vary between different companies. Your quote could vary significantly from the quote of a friend or loved one. The price variations are due to the factors that insurance companies use when they consider the rate of an application. By better understanding the factors that determine your car insurance rate, you can be better prepared, and you can make changes where possible.


The Insurance Rating Factors

Auto insurance premiums start with a base rate, which is determined on a larger category of drivers, such as males older than 40 living in Charlotte, NC, or females younger than 25 living in Asheville, NC. From that point, the insurance companies will look more closely at the individual risk and rating factors that affect the probability of you filing a claim. Here are 10 factors that determine your car insurance rates:


  • Geographical location– Where you are located and where your vehicle will be parked play a major role in the rates. Some areas have a higher crime rate for auto theft and vandalism.
  • Age– Drivers younger than 24 or older than 60 are much more likely to be in an auto accident. Because of those greater risks, premiums will be higher.
  • Marital status– Studies have shown that married couples are found to be less of a risk to insurance providers than those who are single, including those who are widowed or divorced.
  • Years of driving experience and driving record– Drivers who are inexperienced pose a greater risk. Anyone, regardless of age, who doesn’t have experience driving a car will be a higher risk to the insurer. Your insurance company wants to know how safe a driver you are when out on the roads. If you have a clean driving history, you will qualify for better rates. Drivers who accidents or moving violations are considered a greater risk and will pay higher premiums.
  • Claims history– Besides looking at your driving record, your insurance company will look at any insurance claims you have filed. Any claims that you file under $1,500 might not result in a surcharge. You will most likely pay more for any at-fault claims, but you may not be penalized for not-at-fault crashes or comprehensive The number of claims you have filed also matter: the more claims, the greater the risk.
  • Credit history– While it is a controversial topic, research shows that those who have lower credit scores, usually of less than 600, are much more likely to file claims, file inflated claims or commit insurance fraud by filing fraudulent claims. Some insurers might ask you to pay a larger percentage of the policy up front or pay the entire 6-month or 12-month premium before the policy is issued.
  • Previous auto insurance coverage– Having a lapse in your insurance coverage, even if it was just a day, can result in penalties or higher insurance premiums. Studies show drivers without a lapse in coverage are less likely to be in a crash.
  • Vehicle type– Your rates are affected by the kind of car that you drive because the way you drive these cars differs. If an insurer’s data says that drivers with your specific vehicle have filed more claims or are in more accidents, then you are much more likely to pay higher rates.
  • Vehicle use– The insurance company wants to know why you are driving your car. A vehicle that is used to commute to school or work daily faces more of a risk than a car that only comes out of the garage on weekends to drive for pleasure. Personal use vehicles cost less than a business vehicle to cover because cars used for business are more likely to be in an accident.
  • The coverage you select– The higher coverage limits that you have, the more it will cost. The insurer is taking on a higher risk by giving you that extra coverage. If you just have the state minimum insurance, it often won’t cover the costs if you are in a serious accident, to determine if you need extra coverage and how much coverage you should purchase. Otherwise, you might be financially responsible for the damages that exceed your policy coverage limits.


Get Quotes and Check Your Options

You should get quotes from different insurance providers, so you can determine which policy is best for you. Consider more than the rates. Consider the coverages, the customer service, and your ability to speak to an agent or representative when you need to do so.

To learn more about how auto insurance rates are determined, contact the professionals with ProtetiveAgency.com at (877) 739-9367. Our licensed insurance experts will be happy to answer any questions you have