Auto insurance companies consider a number of factors when determining whether to offer to insure you as a driver and how much to charge for coverage. Each company determines how much weight to give to individual factors, but you can probably expect that the insurance company will look at the following when making this determination:
- Age and gender
- Driving record
- How long driver has been licensed
- Marital status
- Where the car will be garaged
Your age and gender matters to the insurance company because they know that young drivers (especially males) are more likely to be involved in an accident. By the time a new driver celebrates his or her 25th birthday, auto insurance rates should start to come down.
Driving record is an important consideration when auto insurance companies are setting rates for their policyholders. If your history behind the wheel includes traffic tickets or one or more accidents, you will be charged higher rates for your coverage than someone who has a clean driving record.
Marital status is also factored in when auto insurance providers are setting rates. Companies consider married policyholders to be more responsible and a lower risk for car insurance purposes than their single counterparts.
You may not think where you live matters when setting auto insurance rates. Insurance companies keep track of locations where claims are made and if you happen to live in an area which has a history of car thefts, you may be charged higher rates.
People who live in large metropolitan areas are also charged higher rates for their coverage. The fact that there are more cars on the road in an urban area means that the likelihood of a collision is higher than for people who live in a rural part of the country.
Type of Vehicle and Your Auto Insurance Rate
The make and model of the vehicle you drive also affects your auto insurance rate. Insurance companies keep track of the types of vehicles which are most likely to be involved in accidents.
If you are looking to buy a new car, you need to understand that you will likely be paying higher rates to insure it. The physical damage part of the policy pays out based on the car’s cash value, which makes a new car a riskier proposition for the insurance company. The insurer looks at how much it is likely to have to pay out for claims when setting rates for its policyholders.
Policyholders who drive sports cars can expect to pay higher rates than consumers who choose a vehicle which is not meant to be driven fast (and is more likely to be involved in a collision as a result). Other vehicles, like SUVs, cost more to insure because they are more likely to inflict damage on another driver’s vehicle if a collision occurs.
If you are considering buying a new car, make a point of contacting insurance providers to get quotes to get coverage for your new ride. You will want to factor this cost in when making a buying decision.