Auto Rate Factors

What Determines your Auto Insurance Rates?

The price you pay for Auto Insurance is based on your level of risk, which is determined by the decisions you've made. It's important to understand the risk factors insurers consider when determining your level of risk so you can make the necessary changes in your life to lower your insurance premium. Not all companies use the same parameters, however. Below is a list of the most common factors that determine the cost of your Auto Insurance Policy.

Driving Record Your driving record mirrors your behavior behind the wheel. If you've been involved in accidents and committed serious traffic violations, you can expect to pay more for insurance than if you have a clean driving record. In other words, the better your driving record, the lower your auto insurance premium.

Number of Miles Driven The more miles you drive, the more time you spend on the road and the greater the odds of getting into an accident. If you drive less than 10,000 miles per year, you can expect to pay less than a person who drives 20,000 miles. Some companies offer discounts to policyholders who carpool or work from home.

Where You Live Insurance companies examine local trends in accident frequency, car thefts, lawsuits, vehicle repairs and the cost of medical care when determining your level of risk.

Your Age Statistics show that more experienced drivers are involved in fewer accidents than less-experienced drivers. Insurers normally charge more for teenage drivers and adults under 25 due to younger drivers' higher frequency of accidents.

Your Gender Statistically, women get into fewer and less serious accidents than men and have fewer DUI accidents, which means that women often play less for auto insurance than their male counterparts.

Your Car The kind of car you drive plays a big part in determining what you pay to insure it. Insurance companies evaluate the cost of the car, the cost to repair it, the likelihood of theft and the car's overall safety record. If you own a sports car, you should expect to pay more for insurance than if you drive a sedan or minivan.

Coverage A higher limit of coverage on your auto policy gives you more protection and increases your insurance premium. Lower limits of coverage cost less in the short-run because you assume more financial risk following an accident. The amount of your deductible along with the types and amounts of policy options (such as optional Comprehensive coverage) also will affect the amount you pay.

Credit Some insurance companies include your personal credit history as part of the underwriting process. This is called a Credit-based Insurance Score. Statistics show that drivers with lower scores file more claims than those with higher scores. Fortunately, most people have favorable credit ratings. Insurers look at a numerical score derived from your credit report. Insurance Scores do NOT consider ethnicity, gender, income, marital status, age or home address.

*Some content provided by the Insurance Information Institute