Factors affecting auto insurance rates

In order to understand how your auto insurance rates are calculated you will have to step in as an insurer for a moment and try to view the situation from the other side. Each decision is dictated by business and risk management logic, so you can rest assured that each factor used for quote and rate calculation is there for a reason.  And it's important for you as a car owner to know these factors because they can have significant impact on how costly the policy will turn out in the end. Let's take a look at some of the most important of these factors.

The car itself

It's logic that the most important factor in rate calculations is the car you're willing to insure. Each car make and model is different in terms of risks and coverage costs, so the insurance companies have detailed statistics regarding every car model they have ever insured with such parameters as top speed, engine volume, repair costs, theft rates, driver and passenger safety, along with many others. By analyzing the data insurers are able to tell how it is likely for a particular car to be the cause of a claim and if the probability is high so will be your auto insurance rates.

Your driving record

Insurers are able to tell how good or bad of a driver you are by simply looking into your driving record. This document contains all your traffic violations, speeding tickets, accident records and other problems you had with your car well since getting your driver's license. The more entries you have the higher will be your premiums because the insurer will classify you as a high-risk driver. So your goal should be keeping the record as clean as possible. If you are able to do that for a long period of time, most auto insurance companies will actually offer you a pleasant discount, so there's a reason for being a good driver after all.

Place of residence

The place your car is registered in also plays a significant role in rate formation since your place of residence will as well affect the risk insurers take upon when covering you. The larger is the city you live in the more you will pay for the same amount of auto insurance coverage. It's quite simple to understand, really. Big cities are known for their heavy traffic and common accidents. So it is more likely to end up in an accident in a large metropolitan area rather than on a typical rural road. Rural drivers will surely benefit from this factor since they always get lower rates due to low traffic in places they usually drive.

Age and sex

Different age groups get different rates because the likelihood of having an accident varies according to how old the driver is. Teen drivers usually get the highest rates because they tend to take risks and lack the necessary driving experience. Adult drivers up to the age of 65 have lower rates since they are mostly responsible drivers who rarely have problems in traffic. Senior drivers are also charged with higher rates because they tend to produce more accidents due to health conditions that affect their reactions. Men tend to pay more for auto insurance than women because they are more likely to have problems in traffic despite the common belief about female drivers being worse.

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