Auto insurance rates are controlled by a list of varying factors ranging in importance to the car insurance companies. Each auto insurance company’s formula for determining quotation prices is a little bit different than the other’s. So it’s good to check around. However, there are some similarities in the auto insurance quotation formula which pretty much all of them agree upon.
If you’re in the market for new car insurance, first of all, make sure you don’t settle for the first quote you receive. Shop around for the best quote. Auto insurance companies vary slightly with one another on their methods of providing quotes, but they are very similar when it comes to the major deciding factors. All companies place the most weight of your premium quote upon the following four categories:
Each major auto insurance provider has a group of statistics on every demographic area in the United States from average household income to crime statistics to the number of claims filed. And they rate each demographic with a certain risk factor. Those applicants living in an area where a large number of claims are filed to the insurance company will expect to pay larger amounts for their car insurance premiums.
2.Type of Vehicle:
Each vehicle is categorized by year, make, model, accessories and, in some cases, any personal modifications done to the vehicle such as suspension kits. Every car has a history of statistics telling the auto insurance company what the liability for insuring that car will be. Choosing wisely and driving a mini-van as opposed to an attractive Chevy Camaro will decrease your premiums. There are statistics on cheap cars to insure made available by your insurance agency.
If you get any negative points on your record with the Department of Motor Vehicles, this will increase your premium quote price. A good tactic to take is to, number one, always drive according to the rule of the road and, number two, take driver’s safety courses which earn you credit towards your driving record.
4. Age and Gender:
The Centers for Disease Control and Prevention has done all of the recent case studies on teenage driving and the statistics don’t lie. Large numbers of teenage drivers get into car accidents. Studies indicate that males are more likely to get into an accident than females. Hence, if you are a teen, and a male, your risk factor with the insurance company is much higher than, say, a middle-aged mom.
Insurance companies take all these major factors into account as you complete their quotation form. By gathering this information, they are able to offer you a reasonable quote according to their company guidelines. Of course, there are other factors that will help or hinder your quotation results, but each insurance company has their slight differences. The best way to insure you’re getting the best price on car insurance is to shop around.