How Car Insurance Companies Calculate a Quote For Your Car
Find out if you’re getting ripped off on your car insurance in less than two minutes.
No long forms · No spam · No fees
Anyone who’s ever purchased car insurance has dealt with the uncertainty of car insurance rates. When you call a provider to get a quote, you probably have no idea what number they’ll give you, and oftentimes premiums are far costlier – or sometimes more affordable – than you predicted. The price of your car insurance quote may seem completely random, but it really isn’t. Auto insurance providers rely on a handful of different metrics to help them determine a price when you call and ask for a quote.
Of course, there’s no exact science to car insurance premium prices. The state that you live in, and the insurance provider that you opt for both play a role in determining the quoted price. In general, you can look at a few different areas to start to understand how a car insurance company comes up with a quote for you.
Your driving record matters the most
By far the most important metric in determining auto insurance rates is your driving record. If you’ve been driving for a while, and have never been in an accident, chances are that your rates will be pretty good. If you’ve been in a handful of collisions, or have something serious, like a DUI, on your driving record then your rates are going to be sky high.
The reality is that insurance companies make money when you drive safely, and lose money when you’re involved in an accident. The greater your record of doing the former, the more willing a provider will be to give you a great rate.
Your demographic has a strong impact
Your age plays a big role in determining your car insurance rates. Simply put, the older you are, the lower your rates will be. Car insurance companies figure that the older you are, the longer you’ve been driving, which means that you’re a more experienced and dependable driver. The numbers back this up, as young and inexperienced drivers are far more likely to be involved in accidents.
While age is the most important demographic factor, your gender and marital status also play a small role. Historically, men, and single people are more likely to be in an auto accident than women and married people.
Different areas have different likelihoods of auto accidents. It’s no surprise that a dense urban area such as New York City or Los Angeles has a higher rate of accidents than a rural town in Kansas, so you can expect insurance quotes to reflect that. If you live in an area where you are constantly at risk of being in an accident, then your car insurance rates will be higher.
The amount you use your car
Many insurance providers want to know how you use your vehicle before offering a quote. Most companies offer a pay as you go plan, or something similar, where you can pay a smaller amount if you don’t drive very frequently.
If you have a long commute every day, however, expect your prices to be a bit higher. And if you use your vehicle commercially, than your rates will really increase.
Your vehicle type
Your type of vehicle usually doesn’t have a huge impact on your insurance prices, though it can. When calculating quotes, insurance providers take into account how much they’ll have to pay to repair or replace your vehicle.
In order to still be profitable, insurance companies have to charge a lot more to insure a new Bentley than a used Honda Civic.
While there’s no specific equation in calculating car insurance quotes, all providers base their premiums on this criteria. Knowing what your insurance company is basing their quote on can help you estimate about how much you’ll have to pay.