How Your Auto Insurance Rates Are Determined
Do you know how your auto insurance rates are determined
? Statistics--the one subject nobody understood in high school is the deciding factor in your premium rates.Even if you are a good driver with no accidents or tickets you can end up paying a high end insurance premium based some factors you can't control and a few that you can control. Auto insurance rates are different for everyone and that's why there is no blanket answer when you request a quote.
Your age and gender are factors you have no control over but are considerations when it comes to your quote. Young male drivers will have higher auto insurance premiums than young female drivers for example even if they have a comparable driving history. Insurance companies base this on statistics. Statistically young male drivers have a higher rate of being ticketed and being involved in car accidents than their female counterparts.
Other considerations that can affect your policy rates include where you live or where you park your car at night to be more precise. High crime rate areas will have higher insurance rates because the insurance companies are hedging that statistically you are more likely than the driver in a low crime area to have your car stolen.
Even how much you drive your car can affect your rates. If you have a long commute to work or school you will pay for it dearly in not only high gas prices but also in high premium rates. The more you are on the road, the more likely you will encounter a bad driver or get a ticket. Statistically speaking you are a higher liability than the driver with a brief commute to their daily destination. Although you could argue the point that most drivers are involved in accidents a mile away from their home and not hundreds of miles away from their destination.
Maybe the cruelest cut of all determinants is the fact that your auto insurance premium is determined by more than the make and model of car and your driving record, your rates are also affected by your credit.
Insurance companies have made the connection that consumers with poor credit are also poor drivers and their rates are higher than a comparable driver with good credit. A bankruptcy may make you look good to some prospective creditors including future landlords because they know you aren't strapped for the rent money trying to pay down debt, but for insurance companies this is a red flag that makes you a high risk candidate to insure.
On top of all of these considerations there is still room to look at your driving record and statistically if you have a history of tickets, accidents or a DUI, your insurance company will deem you a high risk and your premiums will be as high on your old clunker as they would be on a Jaguar for a low risk driver.
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