Auto Insurance Rates - What Affects Rates and How Rates Are Calculated
This is a question that is commonly asked, as everyone wants to know how their auto insurance rates are calculated.
While there are many factors that contribute to your premiums, there are 4 main factors that largely determine what your auto insurance rates will be.
Driver's History This is the main factor when insurance companies decide how much your premiums will be.
The more accidents, traffic violations, and insurance claims you have, the higher risk you are to insure.
If you are a high risk driver, you are more likely to be involved in auto accidents and make a claim, which causes your insurance premiums to increase.
Having no history by being a new driver is not good either, you are an inexperienced and thus a higher risk for being involved in accidents.
Age of Driver This goes hand in hand with driver's history.
Usually the younger you are the smaller your driver's history.
The insurance companies have done tons of research and found that younger drivers with limited experience get into more accidents then older more experienced drivers.
Younger drivers are a higher risk to ensure, so they end up paying a very high amount for insurance.
This deceases slowly over time, but for the first years of driving be prepared for a high insurance premium.
It seems that the magic age seems to be 25, at which your insurance rates drop dramatically.
Make and Model of your Car The type of car you have also plays a major role in your insurance rates.
Cars with bigger, more powerful engines will raise your rate, as the insurance companies relate this to a higher probability of speeding and accidents.
Also it seems that newer cars are more expensive to insure then older cars.
These cars are more likely to be stolen.
They also rate all cars on how safe they are, how likely they are to be vandalized and how likely they are to be stolen.
This all goes into determining how much your insurance will cost.
Where You Live Lastly, where you live plays a role in what your insurance will cost.
Every state/province has different laws, with some states/provinces regulating what companies can charge for auto insurance.
If you live in a city or area with a high rate of crime and vandalism, then there is a higher probability that your car will be a victim of crime or vandalism, thus raising your rates.
There are many other small factors such as distance driven per year, and distance driven to work, that will have small effects on your insurance premiums, but these are the 4 main points that will affect your rate.
While there are many factors that contribute to your premiums, there are 4 main factors that largely determine what your auto insurance rates will be.
The more accidents, traffic violations, and insurance claims you have, the higher risk you are to insure.
If you are a high risk driver, you are more likely to be involved in auto accidents and make a claim, which causes your insurance premiums to increase.
Having no history by being a new driver is not good either, you are an inexperienced and thus a higher risk for being involved in accidents.
Usually the younger you are the smaller your driver's history.
The insurance companies have done tons of research and found that younger drivers with limited experience get into more accidents then older more experienced drivers.
Younger drivers are a higher risk to ensure, so they end up paying a very high amount for insurance.
This deceases slowly over time, but for the first years of driving be prepared for a high insurance premium.
It seems that the magic age seems to be 25, at which your insurance rates drop dramatically.
Cars with bigger, more powerful engines will raise your rate, as the insurance companies relate this to a higher probability of speeding and accidents.
Also it seems that newer cars are more expensive to insure then older cars.
These cars are more likely to be stolen.
They also rate all cars on how safe they are, how likely they are to be vandalized and how likely they are to be stolen.
This all goes into determining how much your insurance will cost.
Every state/province has different laws, with some states/provinces regulating what companies can charge for auto insurance.
If you live in a city or area with a high rate of crime and vandalism, then there is a higher probability that your car will be a victim of crime or vandalism, thus raising your rates.
There are many other small factors such as distance driven per year, and distance driven to work, that will have small effects on your insurance premiums, but these are the 4 main points that will affect your rate.
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