What Factors Determine Your Insurance Premium?
Whether you’re looking to compare car insurance quotes for your new vehicle or you’re looking into switching to another insurance provider, you’ve come to the right place! Perhaps you just purchased a brand-new (or used) vehicle, or maybe you’re just tired of overpaying for your current auto insurance premiums.
We’ll be the first to admit that car insurance (and most insurance , for that matter) can be incredibly confusing. To the average consumer, it can often seem like the insurance industry is rigged against them. It seems like insurance agents have access to all of the knowledge and information and that most policyholders and shoppers have almost no idea of what’s going on.
In fact, if you were to survey most people who have car insurance and ask them what exactly they were paying for, we’d be willing to bet that at least 50% of people would have no idea. That’s because the public school system (and even colleges) don’t bother to teach students about insurance. Even though insurance is something that almost every American is required to purchase at some point in their life, there are very few resources to learn about how it all works.
One of the reasons we started Insuranks is to “declassify” insurance for our readers. In this article, we’re going to discuss some of the top factors that determine your car insurance costs. The next time you’re out shopping for a new policy, you’ll be armed with all of the information that you need to know in order to negotiate a fair price on your monthly premiums and ensure that your agent isn’t ripping you off for their own profit.
Let’s have a look!
Although auto insurance and all of its associate terms may be a bit complicated to understand at first, the general concept is fairly simple and straightforward:
The price you pay for your insurance policy is directly related to the value of the vehicle you’re driving and the risk that you represent to the insurance company.
In quick terms, the more likely you are to wreck your vehicle or be involved in an insurance claim, the higher you’ll pay for your insurance policy. The less likely you are to be involved in an automobile accident, the lower you’ll pay for your insurance policy. Remember, insurance companies are businesses too.
Ultimately, they have to make money to stay in business, which means that they have to keep a close eye on their bottom line and ensure that there’s always more money coming in than they’re paying out in claims. Just like in a casino- the house always wins .
Your car insurance quotes are given by the insurers based on the information you provided to them, and through that they determine your risk profile. Your risk profile and car insurance rates are based on these following factors:
That being said, here are the top factors to consider if you’re wondering how to estimate car insurance costs!
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The age of the driver is one of the most important factors when determining your car insurance premiums. Statistically speaking, younger individuals are far more likely to be involved in an automotive accident, and middle-aged and older individuals are less likely to be involved in an accident.
For example, the most dangerous group of drivers in the United States is drivers between 20 and 24 . This age range makes up almost 8% of all drivers, contributing to over 36% of deadly accidents. These drivers are often young, inexperienced, and their brain’s prefrontal cortex has yet to fully develop. This means that they’re a lot more likely to take risks, speed, drive recklessly, or not be fully attentive while driving. By default, teenage drivers are often lumped into the same category.
In contrast, drivers between the ages of 50 and 54 are the least likely to be involved in a car accident. This age range represents just over 9% of the total driving population, and 21% of accidents end up being fatal.
Apart from your age, your personal driving record is another important factor that all insurers take into account. Your driving record says a lot about how likely you are to be involved in an accident in the near future. For instance, if you’ve gone five years without being involved in a single accident or without receiving a reckless driving traffic ticket, then you look very favorable in the insurer’s eyes.
However, suppose you’ve been involved in two or three accidents over the past five years and/or received numerous traffic violations. In that case, you represent a high-risk customer to the insurer. Statistically speaking, you’re far more likely to be involved in another accident that will cost the insurer more money in claims payouts.
Although it’s not the most important factor, your credit score does play a role in the average car insurance cost. If you have a higher credit score, you’re more likely to be a financially responsible individual who drives with care and always makes their monthly payments on time. Conversely, if your credit score is less than average, then you represent a risk that you may not make your payments on time or might be more of a risk-taker.
The type of car you drive plays a huge role when insurers are determining your car insurance costs. Simply put, the more expensive your vehicle is, the higher your insurance policy will be. The monetary value of your vehicle isn’t the only thing that’s taken into consideration either. Insurers also take other factors into account such as:
The statistical likelihood of your vehicle being involved in a crash.
The color of your vehicle (bright-colored cars tend to be involved in more accidents).
The size of your engine (bigger engines mean faster driving and higher risk).
How many doors your car has (two-door coupes are involved in more accidents).
Safety features in your car (the more safety features, the less likely you are to be involved in an accident).
Apart from your personal information and the car you drive, insurance rates may vary significantly from one auto insurance company to the next. One of the best ways to ensure that you’re getting a good deal is to compare and contrast insurance quotes from one insurer to another.
In the old days, you would have to call each insurer individually and request a personal quote. Today, however, you can use insurance searching platforms such as Young Alfred or Gabi to compare quotes from the top insurers on the market automatically.
Get all the best quotes from leading providers in a click of a button!
I was hopeful about going with Travelers. My cousin oversees the building of large hotels (the W and Virgin in Nashville) and told me that is who he had used commercially. But after having roof damage from a storm, I have had a really bad experience. From the very first person I dealt with, it became quickly clear from my first dealings and was confirmed throughout the process, is how little they care about the people they insure and how they truly want to pay as little as possible. While my neighbors were having positive experiences with their insurance companies after the storm, mine has been terrible. I would highly recommend staying far away from Travelers Insurance and going with literally anyone else but them. —Jason McAnally
AAA is only good if you never have to use them. My daughter was borrowing my car and got hit by a hit-and-run driver who left the scene. AAA would not pay for damages on my car because she was not on the policy and I didn't have full coverage on my car I did have uninsured motorists but they still would not pay the claim so I have a wrecked car and now AAA is canceling my insurance What a waste of time and money. We reported to insurance board and still nothing was done. I'm going back to allstate, atleast they pay claims.
The quote they gave me was not the correct price. it turned out to be twice the amount they said. Plus the agency is in California 1500 miles away and I received bad customer service.
Horrible, we are DRIV3 Rentals a Car Rental Company in Los Angeles California. One of our clients purchased a Bonzah policy to rent a vehicle from us. An accident occurred where there has been significant damage to our 2021 BMW M4, we proceeded to file a claim with Bonzah. Let me just say the way this company handles claims is from the stone age. They do not contact you anywhere except emails. Our company has been in a 100+ email chain with Paul and Art from Bonzah for at least a month. They have confused our claim with other claims and at times just simply not responded back at all. We supplied all the necessary information needed for the claim and everything seemed ok. Fast forward to last week out of no where Paul stops answering so we call him over and over until he answers at this point he not once told us this by the way that they pulled the police report and our driver isn't listed, this is false as I immediately went to the LAPD police station and found out the report Paul pulled was filed online from one of the other drivers and not an official report from the officer on the scene, the officer on the scene made a statement in which debunks that whole claim and in fact our driver was the driver. I have never in my 20 years in the auto industry been accused of anything like this furthermore Paul stating that oh we don't know if your driver knows the other driver and they could have planned this. Insane really, Paul stated that if we could get a statement from the officer he would expedite our claim and damages check, Paul, Art and Bonzah has since started to ignore us. They don't answer calls, emails, text messages anything for almost 2 weeks now. How ironic that once we debunk their claim of our client not being the driver they stop responding. Don't use this company, stay far away.
We have been with progressive for 18+ but Have to give a one star with this experience. We hit a big rock on the highway. Randell Fergen repair rep . argued with me; claimed I was off roading in my car, which I have never done . Randell told me “this was not an isolated incident”. Because my other wheels had scratches according to him. The auto shop they picked and Randell told me it the wheel just needs a balance . Randell quoted me the price I would have to pay for the balance. I took the car to Discount Tire since the balance is covered. Discount told me “the wheel is bend badly” We called back to the rep Kiera Washington to update her and ask for a new repair rep. She said she could not and when I asked to speak to her supervisor she said “ I’m not dealing with you” and hung up on me ????