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The Cost of Auto Insurance: It’s Personal

There are few shopping experiences as personal as buying auto insurance. To build your quote, an insurance agent will ask a number of questions, from your profession to your marital status to your zip code. This is not just to get to know you; your answers play a role in determining the cost of your auto insurance.

Here are some of the factors determining your car insurance rates:

  • How You Use the Vehicle: How and how much you use your vehicle are important in determining your risk of an accident or theft. For each car on your policy, your agent looks at the purpose and frequency of use.
  • Who Is Using the Vehicle: Your risk and the estimated risk of other drivers who use the vehicle are both considered in your cost of insurance. Teenage drivers, for example, have a higher risk for accidents and therefore raise your rates.
  • Driving Patterns and History: Safe, responsible drivers are rewarded with a lower cost of insurance. Accidents and tickets could affect your current car insurance costs for as much as three years. The more incidents you have, the higher your rates will be.
  • Multi-Policy Discounts: Insurance providers return customer loyalty with discounts. By bundling your auto insurance with other policies, you could save money on each premium.
  • Where You Live: Your geographical risk for crime, traffic accidents, and natural disasters all affect your insurance costs. Rates often vary from between zip codes, even within the same city.
  • Age, Gender, and Marital Status: Insurance rates are often based on demographic generalizations and the statistics correlated with each group. Younger drivers, men, and single individuals statistically have a higher likelihood of accidents, so they pay more for car insurance.
  • Your Profession: Your job impacts the way and how often you drive. High-stress jobs, long hours, and work travel increase the potential for accidents.

Because of these factors, auto insurance quotes vary widely. Formulas used to determine rates vary from one company to another. An independent insurance agent is able to compare rates across those companies. The agent may recommend a certain company that favors your profile or have other suggestions on how to lower your rate.

Have you ever seen a significant change in your auto insurance costs when a personal factor changed? Has changing companies resulted in lower rates? Tell us about it in the comments!

Source: “Factors that Affect Car Insurance Rates”

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