Insurance companies use many risk factors to establish insurance premiums. These are used to determine the level of risk you pose to the company. As the risk increases, so too will your costs. Each insurance provider has its own set of factors used to calculate car insurance rates. However, there are several common factors that most providers take into consideration.
Driver Age
Younger drivers are more likely to be in accidents than those who are at least 25 years old. More experienced drivers, typically between 50 and 65 years, tend to be the safest drivers. So, all other factors begin equal, younger drivers will pay higher premiums.
Driver Gender
Female drivers tend to get lower rates because they are statistically less likely to cause an accident. Industry-wide, females are viewed to be the safer gender behind the wheel of car and pose less risk to insurance companies.
Geography
Location is a major factor when it comes to auto insurance rates. Where you live and work is important if you are looking to save money. If you live or work in a dangerous neighborhood, you will probably pay higher rates. Typical weather for your community is also taken into consideration. Living in an area that sees frequent snowfalls which adversely impact driving conditions can increase your rates.
Type of Vehicle
Certain vehicles are safer than others. And specific cars have high theft rates. Both of these realities are factored into your rate calculation. Some insurance providers may give drivers of domestic vehicles lower premiums. This is simply because domestic cars cost less to repair than imports. If you have to file a claim, your insurance company wants to pay out as little as possible.
Credit Score
Drivers may not be aware that insurance companies use credit scores when setting premiums. The underlying belief is that if you have a high credit score, you are responsible. You will be more likely to be a safe driver and less likely to submit a claim.
Driving Record
A history of safe driving can significantly reduce your rates. Driving records are the major factor that car insurance companies look at when calculating your premiums. Any type of ticket or accident can cause your rates to be higher.
There are many more factors that go into your car insurance rate. These are some of the more common ones that have significant influence on your premiums.
