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6 Factors That Affect What You Pay For Automobile Insurance

Your car insurance premiums, or the payment you make to your insurance provider on a monthly or quarterly basis, are determined based on risk. That is to say, how likely it is that you, a customer – and a group of similar customers with the same set of circumstances, will make a claim, and how much those claims will likely cost.

Now we do not want to go into all the mathematics involved with calculating automotive insurance premiums; let’s just say that the theory of probability is involved. Just in case you want to do the math yourself here are some additional factors to calculate into the equation of finding auto insurance premium rates; industry driven predictions on how much it will cost to settle a claim, the company’s overhead, selling costs, industry taxes and the amount that must go into reserve funds to cope with catastrophes.  

Now to get to the important stuff here are 6 factors that can affect what you pay for automobile insurance.

  1.  Where You Live: Where you live matters. If you live in a large city with a higher population density, accidents and vehicle theft are more likely, which may translate into higher premiums.
  2.  The Type of Vehicle You Drive: The make and model of your vehicle can translate into risk factors associated with it. For example, some makes and models fare better in crashes than others, meaning injury to the occupants and damage to the car end up being less severe. Also, newer, more expensive cars cost more to replace, so they are more expensive to insure.
  3. How You Use Your Car: The more driving time your car sees the higher the chances of an accident. This means higher premiums if you drive a lot, you drive long distances or you drive to work every day.
  4.  Your Driving Record: This can be a given, but it should be a good reminder to drive safely. A long driving history with no accidents can help keep your premiums down, and every accident where you’re at-fault may push your premiums up. Speeding tickets and other violations may also increase your premiums, but parking tickets will not affect the price of your premium.
  5.  Your Statistical Group: This kind of grouping can be a good thing or a bad thing depending on where you end up in the statistical combination. What is done is the claims history of the group to which you belong as a driver – for example, the group of drivers of the same age and in the same geographic location, are looked at to see the risk involved in insuring that group. This risk statistic is then used to calculate your chances of filing a claim, and is one factor in setting your premium.
  6. Other Factors: These other factors are mostly out of the control of yourself and your insurance provider, but they are worth noting. Insurance prices can also be affected by interplay in market forces, government regulations, and taxes at many levels, and unpredictable catastrophic events.

We here at Huggins Dreckman Insurance consider every one of our policyholder’s individual history in combination with that of his/her group; there is no one-size-fits-all method of deterring premiums.  That is why we take the time to truly get to know our customers and customize each automobile insurance policy with the utmost care. To get a FREE Auto quote right now check out our easy to use online quote service.


The content in this blog was inspired by IBC to see the original blog please click here.


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