How Auto Insurance Rates Are Determined

Most people have no idea what their auto insurance rate is actually based off of. I believe loosely that it is some “pie-in-the-sky” number that came out of thin air. I assure you it is not in the more you understand your insurance rates the better position you will be to reduce them at some point in your life.

Let’s outline some factors that auto insurance companies is really important and ultimately affect the check you send them every month.

First, your car insurance rates will be higher when you were younger and lower when you are older. One of the great things about getting old is that your insurance premiums go down. When you are young you were viewed as part of the population that is very risky to ensure. Young people by nature act recklessly and take unnecessary risks that older people will not. It is for this reason that rates for a 16-year-old will be 3 to 4 times more than auto insurance rates for a 50-year-old.

Second, your physical location matters. You will pay a little bit more if it snows where you live. People who live in large cities pay more than people who live in small towns or the country. The crime rate of where you live is factored in as well because certain zip codes statistically have higher automobile theft rates than others.

Third, believe it or not your marital status can affect your car insurance rates. Statistically speaking married people are safer drivers than single people. There are a bunch of theories about why this is but it is generally accepted that married people take lesser risk in people who are not married. They have a home, kids, a wife (or husband), a timeshare, and several other liabilities that they are responsible for. A married person, generally speaking, will not be cavalier with his or her life on the road for cheap thrill. Single people, on the other hand, have less to lose and have a history of being more carefree and therefore pose a greater risk of getting into an accident.

Fourth, your driving history (record) is considered. You are considered by the automobile industry to be high risk if you constantly get speeding tickets, run a red light, do not stop at a stop sign, speed any school loan, driver recklessly, do not signal while on the road, or d
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rink and drive. Doing one or several of the items just mentioned will place you into a high-risk category and jack up your insurance rates. If you get too many of those violations in the specified period of time or receive a DUI you will need SR 22 insurance. This is special insurance for the riskiest drivers in the nation and it costs a lot of money. If you are fortunate you will be able to obtain an SR 22 insurance policy for $350 every month. Depending on what car you own you may not be that lucky.

Fifth, and finally, an insurance company takes into account what type of vehicle you are currently driving. Newer vehicles and sports vehicles will demand the highest insurance rates. There are some vehicles that are very safe but easy to be stolen. It will also cost more to insure. If I were you I would check to see which vehicles are relatively inexpensive to get insurance coverage on and which ones are the most expensive before I go car shopping. The amount is based off of statistical data and hard numbers I would not try to guess yourself.

These are the five main components in factoring insurance premiums. There are other smaller items but these are the top five in the ones you need to be aware of. Some of the things you can change some you cannot. But by knowing and understanding why you are paying the amount you’re paying every month you’ll be better prepared to get it reduced in the near future.

By: Advantage Pacific Insurance

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I work as a company driver. I am pretty sure that the car I am using is insured, but the thing that I don’t know is the kind of coverage that is included. As a precaution, I want to protect myself if I ever get into an accident. Is there an auto insurance that can protect me? Thanks!

Armand

San Antonio TX

First of all, I am guessing you are a man who not only values life but also a man who thinks ahead in order to prevent something bad that can happen.

Now to answer your question, yes there is an insurance coverage that can help protect you. It is called the non-owner car insurance. You can acquire auto insurance even though you don’t own a car or any type of vehicle. Non-owner car insurance can help you in many ways. When you get into an accident, all your medical expenses will be paid by the insurance company. Not only that, if you are driving with someone at that time, they can also be free of medical expense. Did I also mention that your car insurance company will also pay for any damage done at the third party? You might probably ask what if I injured someone just walking. Yes, even people that you might hit or run over are included and will be free of medical expenses. In theory, you wouldn’t be spending anything since your car insurance company will pay for any damage or loss. The only thing that you’ll have to spend on is the repair for the car you are using, but I am guessing your company that you are working from will have it covered.

Getting a non-owner car insurance is the same as getting auto insurance, you can go to your local car insurance company or you can have it via car insurance websites.

Bobby

San Antonio TX

If you have a really bad driving record or if your drivers’ license is revoked or suspended, you are considered a high-risk driver by insurance companies. This leads to high auto insurance cost or even denial of insurance. But it doesn’t mean you can’t insure your vehicle anymore. If you have tried and can’t purchase coverage for your car through local companies, you should ask help on your states “Automobile Residual Market”. Visit your local chamber of commerce for help you on how to apply on this program. Anyway, you can search for multiple quotes on the internet from different competing insurers. It will be limited but it is possible that one might offer you an affordable insurance coverage.

You can also be classified as high-risk driver if you have a bad credit history, DUI or even living in a bad neighborhood. These things are preventable so avoid getting involved in an accident to avoid getting high cost of insurance.

Always shop around when you’re still insured and is in good relationship with your current insurer. Yes, being considered as a high-risk driver by insurance providers will most likely be difficult when it comes to finding an affordable insurance premium. But pour some effort and time and you will be able to get a good car insurance deal.

Alice

San Antonio, TX.

Alice,

Your auto insurance after being convicted of a DUI/DWI will effected for several years. A minimum of 3 years is a mandatory requirement. I t could be longer depending on the situation.

You are now high risk. Therefore you will need a specialized insurance called SR22. This insurance is provided to the Texas DPS office stating that you have the proper amount of insurance coverage for you to drive.

Furthermore you need to go online and check out as many specialized insurance companies that handle SR22 insurance and get the best quote and coverage you can afford.

Thank you for the great question. Hope this site helps you in your endeavor.