I often get this question -- “How are auto insurance rates calculated?” In short, I simply explain that an insurance rate formula looks like an equation from the movie Beautiful Mind. All kidding aside, to help demystify how rates are determined, let’s look at a couple of factors that are used to determine rates.
Two major factors are considered when looking at your insurance rate. Your personal profile and specifics regarding your insured automobile:
Personal Profile are all the things that make you unique-
- Your age: The consideration here really is driving experience. If you are under 25 the auto insurance actuaries are not your friend.
- Driver history: If you have recent claims on your driving history (tickets, accidents, DUIs, etc.), you might expect to pay more for your policy.
- Credit rating: How much weight your credit score influences your rate changes from company to company and from state to state.
- Address: Do you live in a heavily populated area? An area with a high-crime rate? Or an area with heightened risk of theft? How many accidents happen in your zip code per capita? etc etc etc
- Marital status: Most insurance company's factors show preference to married couples. That's right -- First your taxes, now your insurance too.
- Vehicle's loss history: The more accidents your auto's make and model has had across the U.S., your state, your county, your city, the higher rate you will most likely have.
- Vehicle theft history: Similar to accidents. The frequency that your type of auto is stolen, the higher risk is typically assigned to your auto.
- Cost to repair: How much do the parts of your car cost? Are the parts to your car more expensive than other cars in it's class?
So as you can see, to know exactly your specific rate is determined is...well...complicated. And there is no harm in calling us to get a FREE quote.
