What goes in to the calculation of your car insurance premiums? Most of us pay our insurance every month (or year) but never consider what actually goes in to our rates.
Insurance companies categorize us in many different ways statistically and those categories calculate the likelihood of us making a claim. The more likely we are to make a claim (that costs the insurance company money) the more we will pay for our auto insurance premiums and vice versa. There are any number of factors that go in to our rate and this article will present some of the inputs that go in to that calculation.
Your Age – Young drivers get in more accidents, at least that’s what the statistics tell us. As a result drivers under the age of 25 get placed in a high risk category and pay more. When drivers reach the age of 25 their rates decrease as they are placed in a lower risk category. Young drivers can escape some of the high premiums by adding on to their parent’s policy.
Your Driving Record – This one is probably the most obvious factors. As we all know, if you drive fast, get in accidents or have a DUI under your belt, you are clearly in a high risk for an accident and will pay a high premium for it. If you haven’t had an accident or ticket in a while, your insurance rates will gradually decline as your record improves.
Your Gender – If you’re a guy, statistics tell us that you are more likely to file a claim. It may seem unfair (and based on some of the driving habits of the women in my life it probably is) but that’s what they tell us. Sorry guys, you’re going to pay more.
Where You Live – Do you live in a city? Do you live in an area where icy roads are common? If so you should expect to pay more because you are more likely to file a claim. Crowded cities like Miami and Boston can expect to pay the highest rates simply because of the number of drivers in a small area.
Vehicle Type – Have a fancy car that thieves might try to steal? Drive a fast car that is likely to go out of control and hit a tree? Get ready to open up your wallet. Before buying a fancy new car talk to your local car insurance agent to see what additional cost insuring the car may bring.
These are just a few of the factors that go in to calculating your insurance rates. Other factors include what type of job you work, your credit history, your marital status and the number of miles you drive every day and throughout the year. When shopping around ask your car insurance agent how their company weights all of these factors to be sure to save yourself money on your premiums.
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