How is the Cost of My Car Insurance Policy Determined?
Have you ever wondered how your car insurance rates are calculated? What affects that number on the bottom of the page? Here’s the answer:
What type of car you drive- some cars cost more to insure than others do. Your rate can be affected by how likely your car is to be stolen, its age, the cost of any future repairs, and how safe it is (or isn’t).
Your driving record- your driving record largely determines how well you drive (at least in the eyes of your insurance provider). The fewer incidents you’ve been involved in, the lower your premium will be. If you have a slew of accidents and driving violations on your road resume, expect to pay significantly more than if you have a clean record.
Where you live- Outside of your own driving ability, some areas are simply safer to drive in than others, both in terms of crime and accident statistics. Your rate can vary depending upon where you garage your car as well.
The number of miles you drive each year- Statistics says by the law of large numbers that the probability of an accident increases with the amount that you drive. Therefore expect a higher rate if you put hefty mileage onto your vehicle each year.
Your age- Young drivers (especially males) will have to pay augmented rates. Generally insurance providers divide the “steps” into drivers who have been on the road for under three years, three to six years, and more than six years.
Your credit- for many insurance providers, your credit score can have an impact on your insurance rates.
Coverage- like any other insurance rate, the price is partially determined by the coverage you already have. Make sure you shop around and get the best possible price for the coverage you need.