How is your car insurance price determined?

The average car insurance price is derived from a variety of factors. Many of these variables are well known and, for the most part, make sense, but it’s always a good idea to look into what insurance companies are looking for when determining how much your coverage will cost.

Driving Record – The price of your auto insurance policy is determined from 6 main areas. The first is your driving record. The most important thing to remember is that the better your driving record, the lower your overall cost of insuring your car. These include car accidents, speeding tickets and believe it or not if you’ve gone several years without insurance. The good thing is that you have direct control over many of these factors. Focus on keeping a clean logbook and this area shouldn’t result in your prices being outrageously high.

Coverage – Occasionally do a self-check and call your insurance company to see how increasing and decreasing your deductible and coverage will affect the price of your insurance. Increasing a deductible lowers your monthly payment. Increasing the deductible has the opposite effect. The same applies to the actual sums insured.

Age – Case studies have shown that younger drivers are involved in more accidents than older drivers. This potential for being involved in a collision is a result of inexperience at the wheel of a motor vehicle. In general, most insurance companies charge more for people under the age of 25.

Car model and mileage – If you’re interested in that fancy new sports car, you might want to see how much that affects the price of your car insurance. Thanks in large part to theft, vehicle expenses, and security records, some cars carry a higher premium than other vehicles. As if it weren’t bad enough, the number of annual miles you earn from driving your vehicle can increase your car policy. The average consumption is 10,000 miles per year. If you exceed this amount, you can expect a rate increase based on your increased potential for being involved in a car accident.

Your Residence – It’s a pretty safe bet that you’ll pay more for your car insurance if you live in a big city compared to a nice farm in the country. The city is likely to have more thefts and accidents resulting in higher costs that are covered by the insurance company and then passed on to the consumer when the insurance companies set the price of your auto insurance policy.

Hopefully this information can help you focus on a few areas of your auto policy that you can review with your insurance agent in hopes of actually lowering rather than increasing your auto insurance rates.