What Determines the Price of Your Auto Policy?

Auto Insurance Basics, Insurance Advice, Liability Insurance

What Factors are Considered in Determining the Price of an Auto Policy?

For most companies, some of the factors considered in the cost of an auto policy include:

  1. Age and driving history of principal driver;
  2. Age of any other drivers in the family who will regularly use the car;
  3. How the car is used;
  4. Claims history;
  5. Make and model of the car;
  6. Where you reside;
  7. Coverage required; and
  8. Your credit history.

Let’s dive into some details.

Principal Driver

Crash rates are higher for all drivers under age 25, especially single males. Insurance prices in most states reflect these differences. Also, drivers who cause crashes generally must pay more than those who have gone crash-free for several years.

Age of other drivers

Here, a classic question is, Are there any drivers under the age of 25?

How The Car is Used

That is, how often and how far you will drive. People who use their car for business and long-distance commuting normally pay more than those who drive less. The more miles you drive in a year, the higher the chances of a crash.

Claims History

If you’ve not been involved in accidents, or at least not involved in accidents that you have caused, you’ll have lower auto insurance premiums.

Make and Model of Car

Car insurance providers often offer discounts to customers who drive safer vehicles.  Driving vehicles that rate highly in terms of driver protection and passenger protection, means discounts on insurance.

Where You Reside

Generally, due to higher rates of vandalism, theft, and crashes, urban drivers pay more for car insurance than do those in small towns or rural areas.

Coverage Required

The higher the deductible, the lower the monthly payment.  Other issues that will arise involve collision/comprehensive coverage, minimum versus maximum coverage, and personal liability.

Your Credit History

It has been shown that certain credit information can be predictive of future insurance claims. Where applicable, many insurance companies use credit history to help determine the cost of car insurance. Maintaining good credit can have a positive impact on the cost of your car insurance.

Car Features

The cost of an auto policy can also be discounted if the vehicle has certain features. For example, the presence of anti-theft devices generally lowers the overall cost of auto insurance.

What Kind of Driver Are You?

Also, driver attributes can often lead to discounts.  These include a “good driver” record and good student discount (for households with high school or college age drivers). “Accident forgiveness” options may also be available, along with multiple-policy discounts.


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