5 Determining factors for Auto Insurance Rates

5 Determining factors for Auto Insurance Rates


Getting good auto insurance rates can be quite difficult. You might get one rate and then a friend or loved one tells you something else. Although different rates exist, there is however a formula used to create these rates. For auto insurance companies, a number of factors are considered when charging for automobile insurance. It is important to be familiar with these factors as it would put you ahead. The following are factors that can determine your auto insurance rates:

  1. Where You Live

Zip code is one of the factors considered for most insurance. As verified by the National Highway Traffic Safety Administration (NHTSA), 52% of accidents occur close to home. Insurance companies therefore charge cities or neighborhood with a high rate of accidents and vehicle thefts higher auto insurance rates than others. The number of uninsured drivers in the city as well the average cost of repairs is also considered.

  1. Your Driving History

Years of driving experience alongside the number of accidents, tickets or claims is also considered. Against the foregoing, a driver with substantial years of experience with no tickets, claims or accident will be charged a lower insurance rate.  On the other hand, a driver with a lot of accident records especially where such driver is at fault would be charged a higher auto insurance rate. Faults on your record will however be reduced as time goes on.

  1. Demographic Factors

Factors such as gender, educational status, occupation, marital status and credit scores also determine the rate of auto insurance. This is because most insurance companies have figured out that some people as well as some trades are less risky than others.

  1. Your Choice in Vehicle

Auto insurance rates are also significantly determined by the choice of the vehicle you drive. Some  vehicles are more prone to theft than others. This thus affects insurance rates. Vehicle size, Age and cost of repair make up all the factors that are considered.

  1. Policy Coverage Choices

The choice of your coverage determines your auto insurance rate. Most states usually have a minimum coverage limit which is most times insufficient. It is however advisable to have a suitable amount of coverage to effectively protect yourself and your vehicle.

Owning a vehicle means paying for auto insurance which most people don’t want to hear about. The importance of this coverage can however not be overemphasized. An understanding of the factors that determine auto insurance rates would indeed help you decide which car insurance rate is best for you. You can begin with our auto insurance quote tool.