There are many points that are taken into account when a policy premium is calculated. Most motorists have a pretty good idea about the major influencers. However, some drivers may benefit from refreshing their knowledge about the key points. Also, some may think that they know, but their information may be based on a myth or just outright wrong.
Technological advancements made it easier to complete complex calculations in seconds, and that helps a lot. So, companies include many details when they offer auto insurance quotes. Some of them are still fairly new, and some we will probably never know. Of course, we can guess what goes in it, but we don’t know how important those details are in determining the premium amount.
Here are the major influencers;
Your Location
This goes in many ways. We can start with the state you live in. Each state determines the traffic and insurance laws and limits independently. So, their decisions affect the rates. Your immediate location is as important since it will affect the prices you get charged. If you are living in a busy city, you will be charged high rates due to heavy traffic and higher crimes in those places. You may think that it isn’t something you can control, but you still get charged for the claims others make.
Driving Records
There is no secret about this. Your driving records determine the vehicle insurance rates you get charged. However, it isn’t a perfect correlation. For example, after five clean years, you shouldn’t expect lower renewal premiums even if it is the twentieth clean year. They stop counting after the first five. But you are pegged back to “0” years once you have one claim. In the same way, the second one may not have a huge influence since you are already marked.
Policy Coverage
This is one area that isn’t clear-cut. That is why it is worth talking about it. Sometimes you may not really see a huge price difference between full coverage and liability-only car insurance quotes. Many carriers prefer responsible motorists who like to insure their automobiles properly, as opposed to the ones who just once the minimum legally required. Responsible behavior is what reduces the claims. So, don’t just think that basic coverage would be much cheaper. Always get a few quotes for different levels of coverage before deciding.
Car Insured
You may think that because you have a vehicle with tons of safety and security features, you are going to get lower premiums. You may be wrong because companies mainly look at the purchase cost in case it is totaled. And they look at how expensive it is to repair it in case it gets involved in an accident. That is why commonly available vehicles attract cheaper insurance rates. In any case, you probably went for such an advanced model because you care about your family’s safety. So, it isn’t all bad, after all.
Companies You Approach
Not many people talk about this, but each has its risk criteria and premium calculation methods. Some are great for good drivers with a low-risk profile, while others aren’t much concerned if you have one little accident but worry more about your credit score. When you end up with a company that simply doesn’t like your kind of applicant, you will notice it.
That is if you get car insurance quotes from companies too. If you only have one price in front of you, there is no way of knowing if it is cheap or expensive because you have nothing to compare it to. So, keep these points in mind when you look at your policy again next time.