Auto Insurance – What Factors Determine Rates

There are many factors which will be used to determine rates in Auto insurance companies. Though you have the same car and a comparable driving record as your friend, your auto insurance rate might be higher than that of your friends. You might have wondered a lot why such a thing happens, though you did a lot of research before you found one.

The reason behind this is mainly because there are some factors used to determine these rates which are unknown to many. There are factors like zip code, marital status, etc beyond the similarities in car, driving record, etc to be considered in determining the rates for the auto insurance. The other main factor is the location where your house is located. It matters a great deal whether it is located bordering any city boundaries or whether it is in another street leading to another zip code. This difference may decide the insurance rates. The same applies to a driver who is married. In case of married ones, the insurance rates are often lower because of claims statistics.

Auto insurance companies look into the total claims and sort them out on the basis of zip code, marriage along with many other factors like driving record, driving experience, etc. Based on all these factors, companies may lower and raise the insurance rates according to the claims ratio. Some of the examples are

Example 1)

Out of the total number of accidents, 25% of them were married and the remaining were single.

Result = Lower rates for those who are married and higher rates for those who are single.

Example 2)

Out of the total number of accidents, 6% of them were in zip code 90037, 0% of them was in zip code 92345.

Result= Lower rates for those in zip code 92345 and increase rates for those in zip code 90037.

It is not possible for the auto insurance companies to raise rates whenever they want or wish. They need to submit a request for rate change in addition to documentation to the controlling government agency like the Department of Insurance. The change in rates, if any, needs to be approved or denied by this agency.

The main factors used to determine the auto insurance rates are:

* Date of Birth

* Driving Experience

* Gender (male or female)

* Driving History

* Zip Code

* Marital Status

* Occupation (vehicle use)

* Coverage Requested

* Prior Insurance (possible discount)

* Commute Mileage (distance to or during work)

There may also be some discounts, which will help in lowering the rates like

* College Degree Discounts

* Senior – Mature Driver Discounts

* Good Student Discounts

* Vehicle Safety Discounts

* Multi-Car Discounts

* Safety Course Certificate Discounts

The above mentioned are mostly the factors that are used in determining the auto insurance rates. The next time when you get your auto insurance, by looking into these factors, you will have a better understanding of how the rates will be determined.


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