Cars Insurance

How is your car insurance policy price determined?

car insurance
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The average policy price for auto insurance is derived from a variety of factors. Many of these variables are common sense and, in most cases, make sense, but it’s best to understand what your insurance company is looking for when determining your insurance costs.

Driving Record – The price of your car insurance policy is determined by 6 main aspects. The first is your driving record. The key thing to remember is that the better your driving record, the lower the total cost of your auto insurance. This will include car accidents, speeding tickets, and if you haven’t had insurance for several years, believe it or not. The benefit is that you have direct control over many of these factors. Focus on maintaining a clean driving record, the area shouldn’t cause your rates to be too high.

Insurance Amount – Sometimes do a self-check and call your insurance company to see how raising and lowering your deductible and insurance amount affects the price of your insurance. Raising your deductible will lower your monthly payment. Increasing the deductible has the opposite effect. The same is true for the actual insured amount.

Age – Case studies demonstrate that younger drivers are involved in more accidents than older drivers. This possibility of a collision is due to a lack of experience driving a car. In general, most insurance companies charge higher rates for individuals under the age of 25.

Vehicle Model and Mileage – If you’re interested in that fancy new sports car, you might want to check how much it will affect the price of your auto insurance policy. Thanks in large part to theft, vehicle costs and safety records, some cars command a premium over others. As if that weren’t bad enough, the annual miles you put on your vehicle by driving can add to your car policy. Average usage is 10,000 miles per year. If you exceed that total, then you can expect a rate increase based on your increased likelihood of being involved in a car accident.

Your home – If you live in a big city, you’ll pay more for car insurance than a nice farm in the countryside, and it’s a very safe bet. There may be more thefts and accidents in the city, which leads to higher costs for insurance companies, which are then passed on to consumers when the insurance company determines the price of your auto insurance policy.

Hopefully this information will help you focus on certain areas in your auto insurance policy that you can review with your insurance agent in hopes of actually lowering, rather than raising, auto insurance rates.

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