subject: Factors That Determine Auto Insurance Rates [print this page] Factors That Determine Auto Insurance Rates
Auto insurance rates are determined by multiple factors including coverage, driving experience, driving history, zip code, and the vehicle being insured. All of these variables and many more determine the premium on an auto insurance policy.
The coverage available varies by limits and options of coverage. A few examples of this would be if a consumer were to purchase a liability only policy or full coverage insurance. The amount that will need to be charged for the policy will increase depending on the coverage that is selected. The more exposure that the insurance company has the higher the premium will need to be on the policy.
Some of the largest factors that determine the premium are the license experience that the operators have as well as the driving history. Less experienced vehicle operators and clients that have moving violations have historically caused more accidents. Insurance companies need to charge the appropriate premium for the amount of risk involved in insuring their clients. As a result these drivers typically pay a higher premium.
The vehicle that is being insured and the area that the vehicle is garaged is a significant factor as well. Premiums for vehicles with physical damage parallel the value of the vehicle. The more expensive the vehicle is the higher the premium will be. The garaging address of the vehicle itself will vary based upon the region or zip code that the vehicle is kept. Generally rural areas will have a lower premium than more metropolitan areas. Insurance rates are based upon historic averages and when creating a rating table the insurance companies review accident and theft frequency. Highly populated areas have higher theft and collision averages.
In closing, the auto insurance premium will vary based upon the historic averages and statistics. Rate tables are created to ensure that the higher the risk to the insurance company the higher the premium on the policy will be.
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