What Affects My Car Insurance Premiums?
Car insurance premiums are based on a variety of factors that each have a different weight. In other words, not all factors are treated the same. Not only that, but each insurance company weighs certain factors higher than others and some don’t even consider certain factors at all. Simply put, each insurance company has its own algorithm, prepared by its actuaries, to base its insurance premiums on.
The most important factors, which apply to all insurance companies, are age, driving record, distance to work or school, annual mileage, where you car is driven, what geographic location your car is normally parked in and what coverage options you desire. Let’s examine some of the big factors to get a better understanding of what affects your car insurance premium.
Driving Record
Insurance companies have huge databases filled with information pertaining to everything you put down on your application for insurance. They have analyzed this information over the years to determine varying probabilities of a loss for each factor. For example, if you are under 25 years old, then your insurance costs are going to be higher than a person over 25 with the same driving record and experience. This is due to the fact that you have a higher probability of being involved in an accident that’s going to cost the insurance company money.
Your Car’s Rate Groups
Just as people with different ages are rated differently, so are different cars. This is because insurance companies have found out that certain vehicles have different probabilities of being prone to theft or to higher repair costs. Not only that, but insurance companies consider you vehicle’s crash safety ratings in determining your insurance costs, as a vehicle with a poor front end collision rating, is more likely to produce a loss of life and untold damage in an accident, which would costs the insurance company.
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