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What affects my auto insurance rate?



Every insurance company has different ways of pricing insurance. Most of it is actuarially determined by insurance underwriters. Some of the cost depends on specifics around the business of the company itself (agents’ commissions, advertising costs, amount of claims the company pays out, etc). 

Some variables depend on the driver such as your credit score, driving history, age, and sex.

But there are other variables in regards to the cost of your auto insurance that you can control. 

For example, the type of car being insured. Obviously, the more expensive the vehicle, the more expensive the coverage to protect it.  It is possible to get a rate on a car that you don’t yet own.  If you are shopping for cars, it may be advantageous to get insurance quotes to see the effect that different makes and models would have on your auto insurance premium.

Locality of the insured is also important.  Are you driving in a more urban setting or suburban areas?  Since statistically there are greater risks involved with urban driving (such as theft and accidents) these drivers will usually pay more than suburban drivers.  If you’ve recently moved to a more rural area, you may be paying too much for your car insurance. Insurance companies also consider how much you drive.  There is a greater risk associated with driving more often and further distances and these types of drivers are more expensive to insure.

 Rates can also increase and decrease over the years as mortality rates and life expectancy rates change nationally. It may be a good practice to get a new quote every couple of years, just to see if you are able to take advantage of any lower costs.

The most important thing to remember when shopping for cheap car insurance is to make sure you understand what your policy does and does not cover.  Make sure you discuss with someone when you purchase the policy what your coverage includes.  If you have questions, the time to ask is before you get in an accident.  Companies have various ways which allow you to research your insurance policy such as on line, or via email or telephone call.  Take advantage of the customer services the company offers.

Here are some more tips to keeping your insurance costs low.