How is your car insurance rate determined?

carHave you ever wondered what determines the price of your car insurance? How and why do your rates change? Why are you paying more (or less) than you were at this time last year? These are all questions that go through a consumer’s mind when evaluating their respective rates.

Allow us to walk you through some crucial factors that help determine your insurance premium.

° Deductibles: The higher the deductible, the lower your premium will be, and vice versa.

° Coverages: Opting for more thorough liability coverage to better protect your assets and future earnings, as well as additional coverage (such as rental, reimbursement, full glass, and roadside assistance) will, understandably so, contribute to higher rates.

° Credit Based Rating: Many companies use a credit based insurance score to determine your car insurance rates. Higher scores correlate with responsible driving habits.

° Motor Vehicle Driving Record: If you’ve received a traffic violation or had an accident within the last 3 to 5 years, most insurance companies will take that into account. The rate could subsequently increase. On the flip side, if a driver has gone a longer period of time without a violation or accident, the rate could end up being lower.

° Age: Drivers between the ages of 25-65 typically pay lower rates.

° Make and model: Vehicles that perform better in crash safety tests usually have lower rates. Vehicles with higher sticker prices usually have higher comprehensive and collision rates.

° Residence: Living in heavily populated urban areas will make your premium more expensive than living in a suburban area. Urban areas have higher rates of vandalism, theft, and accidents, all making them more expensive than rural areas and small towns.

° Mileage and Usage: The more you drive and the further you drive, the more you pay. Your reason for usage (personal, business, etc.) is a factor in the rate as well.

With so many personal factors determining your auto insurance rates, it’s easy to understand why it often varies from one person to the next. Here are some ways to lower your rates:

° Increase your deductible

° Take a defensive driving course

°  If you’re the owner of multiple cars, there’s also the possibility of receiving a multi-car discount

° Driving fewer miles

° Some companies use vehicle tracking devices (like Progressive’s “Snapshot”) that monitor driving, which can offer additional discounts

° Bundle your home, auto & umbrella policies together with the same carrier, as they may offer multi-policy discounts.

There are many factors not in the control of an individual, so it’s important to take advantage of those that are. Contact us today if you are interested in getting the best coverage for you and your vehicle.

Share on LinkedInShare on FacebookPin on PinterestTweet about this on TwitterShare on Google+Share on TumblrEmail this to someonePrint this page