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How Auto Insurance Rates Are Determined

There are many different factors that help determine your auto insurance rates and understanding these factors will help you know what to expect when comparing quote prices. When getting a quote, expect to be asked questions regarding where you live, what type of vehicle you drive, and how your driving history is over the past few years.

Insurance companies try to determine how much risk you pose to them as a driver. To do this, they require information regarding your age, gender, marital status, driving history, vehicle location, total number of miles driven, and many other factors. They then use this information to calculate your auto insurance rate, or premium.

While getting a quote, insurance agents will typically ask you about the following:

• Age
• Gender
• Marital Status
• Primary Address
• Driving History
• Insurance History
• Vehicle Description

Why your age matters:

Based on statistics, drivers in different age groups pose different levels of risk to insurance companies.

16 - 25 years old:

Statistically, this age group has the most amount of accidents and is the highest risk to insurance companies. Males under the age of 25 tend to have far more accidents than females of the same age group.

25 - 50 years old:

This age group typically has fewer accidents than younger drivers, and married drivers tend to have fewer accidents than people who are single.

50 - 65 years old:

Of all of the different age groups, this group has the least amount of accidents and poses the least amount of risk to insurance companies.

65 years and older:

Statistically, once drivers reach the age of 65 or more, they are more likely to have accidents again.

Why where you live matters:

The town or area where you live is one of the most important factors in determining your auto insurance rate. Areas with a higher population density, such as cities and urban areas, typically have a higher frequency of accidents, claims, car theft, vandalism, and fraud. Insurance is generally more expensive in these areas.

A town or area with a low population density has fewer drivers on the road, and thus less chance of getting into an accident or filing a claim.

Why your credit score could be a factor

Currently, credit history is not used as a rating factor in all states. However, insurance companies in several states do use credit history to help determine auto insurance rates for drivers.

Insurance companies argue that drivers with bad credit are more costly for them to insure because they are more likely to be canceled for non-payment, have a lapse in coverage, or have to file a claim.

No one driver is the same, the only way to know your best rate is to shop. Let us do the comparison for you.

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