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What factors does a company consider when calculating car insurance rates?

Insurance companies use several factors to calculate your car insurance rate. There are some things that you can do to help manage your rate. Perhaps not right now, but your future actions could have a long term effect on saving you some money on your car insurance.

Driving Record: First, companies look at your driving history. If you haven't had any tickets or accidents in the past several years, you should be in good shape.

Credit Score: An insurance company may also look at your credit rating. This is a fairly new practice. Insurance companies have found that a persons credit rate is a good indicator of safe driving habits.

Age of Driver: An older, more experienced, driver will pay a lower rate than a driver that has only been licensed for 2 months. An inexperienced driver has a higher accident rate than most experienced drivers.

Vehicles: The vehicle you choose will impact your insurance rate. It isn't just the value of the vehicle that matters. The safety and average repair cost for a vehicle make a dif fence as well.

Garaging Address: Insurance companies (all of them as far as I know) view the area where you live as a major factor in determining your rate. If you live in a city, you are probably in a more densely populated area than someone who lives in a more rural setting. The more vehicles that are on the road, the more likely you are to have a collision with one of them.

Vehicle Use: Your vehicle use includes factors such as the total annual mileage that you drive, the number of miles each way to work or school, and whether or not you use your vehicle in the course of business. It makes sense that someone who drives 1 mile to work 4 days a week is less likely to encounter an accident than the individual who drives 40 miles each way 6 days a week. The person who is on the road more has a higher likely hood that he or she will be involved in a motor vehicle accident.

As you can see, you can instantly alter a couple of these factors. You can determine where you live and the car you drive. If you are moving, call your company to get an estimate of the insurance cost at one location over another. I have seen rates that are 300% more at one address compared to another that is just a block away. You can also choose the car you drive. Remember, call your insurance agent or company when making a change. Get an estimate and make an informed decision.

Don't settle for the first car insurance rate you find. Comparison shop until you have 3 rates from different companies. You're likely to get a better rate by shopping around. Once you are with a company, it is a good idea to shop your rate once every three years, or if you are moving to a new address.

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