How does the car insurance company decide how much to charge you for coverage? It is a question that is often shrouded in mystery, especially since a company that is most affordable for one driver may prove most expensive for another. The truth is that insurance companies create special formulas that calculate a driver’s likelihood of being in an accident or filing a claim based on certain individual risk factors.
Some put more emphasis on certain factors than others, which is why rates can vary so drastically from carrier to carrier. Continue reading to learn which variables may be contributing to the cost of your premiums and what you can do to ensure a good value on your coverage.
Your insurance rate is based on much more than just your driving record or your claims history. Insurance companies have access to a wealth of information about you, and they use much of it to estimate your future driving behaviors and the likelihood that future claims will be brought against your policy. There are many different variables that make up your individual risk profile, some of which include:
- Your age and the age of other drivers on your policy
- The types of vehicles you are insuring
- How many miles you drive per year
- The primary purpose of your vehicle (i.e., business, leisure, etc.)
- Your debt and credit history
- The number of recent car accidents or traffic violations you have had
- The number and types of recent claims you have made
- Where you live (i.e. high-crime neighborhood, rural vs. urban)
The above factors are some of the most common variables used to determine car insurance rates, although some insurance companies may not use all of them when calculating a driver’s risk. Likewise, some insurers may place greater emphasis on certain variables than others; hence the reason your personal quotes may differ significantly from the same amount of coverage between carriers.
Finding Competitive Rates on Great Coverage
Given the nature of insurance risk assessment, it is important to be matched with a carrier that is more favorable toward the negative factors in your risk profile. Instead of wasting time shopping with multiple agents representing several different companies, you can save time and money by using the assistance of an independent insurance agent here at Smith Insurance and Financial Services.
When you use an independent agent, you still get the helpful guidance and assistance of a dedicated agent, but you have access to coverage quotes from several of the state’s leading insurers – not just one. We work to find competitive rates on the coverage you need, and we also search to uncover valuable discounts that could yield additional savings. Examples include discounts for:
- Safe driving
- No recent claims
- Young drivers with good grades
- Combining home and auto with the same carrier
- Insuring more than one vehicle on the same policy
If you want to maximize your savings further, we can show you how raising your deductible can reduce the cost of your premiums without sacrificing your overall coverage. For more information about the cost of car insurance or to request your free quotes, contact our office today. We look forward to serving you soon.