When offering car insurance rates, companies will consider a series of elements to determine what they can offer to each customer, and at what price. This is why using a car insurance comparison platform is always worth while. Every company has different parameters for this process, but some factors are determinant in most of the cases, like:
- Age: Experienced drivers are statistically less involved in traffic accidents, so they represent a smaller risk to insurance companies. On the other side, young drivers (especially teenagers) represent a higher risk since they get into more accidents. Therefore, older people can get less expensive premiums. Premium costs regularly start decreasing at the age of 20 and reach their lowest at clients’ mid-50s.
- Driving score: Your driving history represents the way you drive, and how likely it is that something happens to your car. Speeding tickets, traffic fines, and accident history affects a lot your chances of getting cheaper premiums since drivers with a bad score can be a large cost to insurance companies
- Credit score: Just as driving history, credit score is used to try to predict your conduct in the future. Statistically speaking, clients with lower credit tend to file more complaints than those with good credit. However, not all companies are allowed to look at a client’s credit score to calculate insurance premiums, it depends on each place’s laws.
- Location: Country, state, zip code, it all can affect your car insurance rate. The place you’re in gives companies information about traffic volume, climatic conditions, and crime rates, all of which could affect your car’s integrity. That’s why premiums can be a lot more expensive in urban areas, rather than rural and less populated ones,
- Car model: Rates can get pricier depending on how new your car is, its size, cost of repairs, and the model’s overall safety record. Although people usually think that newer cars are more expensive to insure, it’s not always like that, since automobiles with high-quality security systems (that you’re most likely to find on more recent models) may qualify for lower insurance rates. Many websites list different brands and car models and their regular coverage premiums.
- Car usage: The more you use your car, you become more likely to be involved in an accident. Companies can check your annual mileage to see how much you use your car, and set prices depending on that. If you use your car for work, have kids that have to drive somewhere all the time, or you use to drive long distances, you’re more prone to getting a higher rate. Driving less than 12000 miles a year can give you chances of a discount.
As we said before, every company has a different method of calculating rates, they won’t always take into count the same factors since it depends a lot on the place, even agencies of the same company in different parts of the same country. But we can say that, overall, insurance companies look for elements that can allow them to predict a client’s behavior, that way they can estimate the cost they might represent in the future, and therefore establish higher or lower insurance rates.