Auto Insurance Price Factors

Insurance Companies determine prices by creating customer profiles and statistically analyzing large sets of data to determine how much, on average a customer in that profile will cost. Each insurance company creates their own profiles and risk analysis. As a customer, you want to find the most favorable risk group to fit into (because favorable groups mean lower risk and therefore lower prices).

While many insurance companies sometimes use non-standard factors (like a student's grades), in general, these are the major factors:

1. Driving History: You will quickly get bumped into higher risk categories if you have speeding tickets, accidents, or at-fault claims on your record.
2. Where you live: Auto theft is higher in some parts of the country. Additionally, road conditions, medical costs, and driving habits differ. There's not much that you can do about this, but be aware that if you move, your premium may change.
3. Your age and gender: Kids may know everything but they're worse drivers (statistically). If you have new drivers on your policy, you'll pay more. In particular, young male drivers are the most expensive.
4. Your truck or automobile: Some autos are more valuable and therefore cost more to repair and insure (additionally, certain cars are more likely to be targets of theft). Along the same lines, cars with better safety records and safety features (automatic seat belts, air bags, anti-lock brakes, etc.) may save you money.
5. Miscellaneous: insurance companies will often ask about your profession, your education, your marital status, your home ownership status, etc. to help create a "risk profile" for you.
6. Your credit score. Insurance companies sometimes use your credit rating to assess your general "riskiness" (not just whether or not you'll make payments on time but they may use it more broadly). Check out our page on hints for improving your credit rating.

In many cases, there is not much you can do about your risk profile beyond creating a safe driving history. However, because each company creates their own risk profiles, you should shop around when looking for a new insurance policy--it really pays off!

We are not affiliated with any of the establishments listed on this site. The advice on this site is based on our own experiences and those of other visitors who have contributed. We imply no guarantee, and the research here should NOT be taken as professional advice. Disagree or have something to add? Email us! This is a community-based site--feel free to contribute or link to us if you found it useful!

© 2005 HotInsuranceHints.com