How Are Car Insurance Rates Calculated?
Ever wondered how your car insurance premium is calculated? What factors are
taken into consideration? Why you are asked so many questions?
Insurance companies ask a lot of questions because you are entering into a
contract with them where there is the potential for millions of dollars to be
paid out on a claim. They need to know as much about you and your driving
profile as possible so that they can assess the risk and charge you the right
amount for assuming that risk.
Insurance rates are based on large amounts of data and information including
the claims and loss experience of each insurance company. This information
allows an insurance company to estimate the likelihood of a particular profile
having a claim in the future.
So, what are some of the factors that determine your rate?
Where you live: If you live in the country, the odds are
that you are less likely to have an accident than if you lived in the city
because there are less cars on the road than in the city.
Type of car you drive: New and/or more expensive vehicles
may cost more to repair or replace.
Use of car: How much and when you drive makes a difference.
If you drive in rush hour every day to and from work, there are more vehicles on
the road and therefore the odds of an accident are higher than if you only drive
on the weekends.
Driving history: The more driving experience you have is
typically associated with better driving and a reduced likelihood of getting
into an accident.
Driving record: The more tickets and At Fault claims you
have, the more likely you are to have claims in the future making you a higher
risk for an insurance company.
Regardless of where you drive, your car or your driving record, you should not pay more for
car insurance than you need to. In order to ensure you are paying the lowest
rate available, visit InsuranceHotline.com and find the 3
lowest quotes for your driving profile from over 30 insurance companies.