You pay your auto insurance rate without question because it’s required of you in order to legally drive your vehicle. But have you ever wondered what structure determines that price? In addition to the coverage options, limits, and deductibles you choose, certain elements outweigh others when it comes time to calculate your rate.
Although insurance providers differ on what exactly they use to determine your rate, these categories generally influence your auto insurance premium the most:
Driving Record: The better your driving record, the lower your rate. If you’ve had accidents or any traffic violations, it’s likely you’ll see your premium rise. Being a new driver can cause a higher rate as well, but it will eventually drop as long as your record stays clean.
Gender, Age and Marital Status: Women tend to get into fewer and less serious accidents than men, so they generally pay less for auto insurance. It’s typically believed that age brings experience behind the wheel, so drivers receive higher rates until they turn 25. Statistics also show that married drivers are less likely to get in an accident than single drivers. However, a driver can negate these factors with a great driving record.
Location: If you live in an urban area with high levels of traffic where accidents, theft, and vandalism are more likely, this can affect your auto insurance rate.
Other factors that affect your rate to a lesser extent but are still important parts of the equation are the make and model of your car, your credit-based insurance score, how you intend to use your car (frequency, distance, etc.), and poor insurance history.