You may not realize it but there are a variety of factors that determine your vehicle insurance rates. When you go looking to insurance your vehicle, regardless of what type of vehicle you are looking to cover, there will be many factors that determine your vehicle insurance rates. Each insurer will vary in their vehicle insurance rates so it is important to look around and compare before you settle on just any company. What kinds of factors will companies look at for vehicle insurance rates?
Five Factors That Insurance Companies Will Use To Determine Your Vehicle Insurance Rates
1 – Driving Record
Your driving record plays a huge part in how much you will pay each month. If you get one speeding ticket, it is not going to do much to your insurance costs. However, getting multiple tickets in one year will cause your rate to rise. Of course, certain kinds of tickets can do great harm to your driving record. For example, running a red light or failing to stop at a stop sign can cause your rates to rise significantly.
2 – Vehicle Type
Your insurer will also factor in the kind of car you are driving. Newer vehicles will cost you more to insure. Some vehicles, new or not, will always be thought of as high risk because of a high theft rate. Sports utility vehicles are going to cost more to insure than passenger cars. Sports cars such as the Corvette or Mustang are going to be expensive to insure. Insurance companies know that people who buy these cars will not go the speed limit.
3 – Age
Another big factor in vehicle insurance rates is age. If you are younger, you are bound to pay a lot more for your insurance than someone who is much older. Vehicle insurance rates start to drop at age 25. Insurance companies know that younger drivers tend to be more at risk behind the wheel because they are not as experienced, can make mistakes and may be reckless. Most accidents that occur have involved teenagers and young adult drivers. Most of these accidents were preventable.
4 – Marriage vs. Single
Insurance companies will also factor in marriage since statistics show married people tend to drive safer on the road. The reason is that insurance companies see married people as having more to lose than single folks. After all, married people tend to have jobs, families, children, a home, etc. They often do not want to lose these things for a cheap thrill ride. However, unmarried folks are more likely to take unnecessary chances and drive recklessly.
5 – Place Of Residence
Automobile insurance companies will also factor in where people live to come up with vehicle insurance rates. For example, people who live in a city tend to pay more than those folks who live in a smaller town or out in the country. Any place that suffers from inclement weather that causes an extraordinary amount of accidents will have higher vehicle insurance rates. A person who lives in the city is at a higher risk for accidents because they are driving in crowded areas.
The vehicle insurance industry has a significant amount of risk assessors and statistics analysis professionals to spot trends and conduct market research. The data they collect will let them know which demographic is high risk and which is not.
Believe it or not, numbers will never lie and your vehicle insurance rates will be based on those numbers. If you can understand them, you can learn what you are paying, why you are paying and how you can change it so that you pay less for your insurance. There are some things you have power over such as getting tickets and what vehicle you drive. However, your age, marital status and location are often not within your control.