Factors That Determine Car Insurance Quotes

Whenever you are gathering car insurance quotes in search of your next policy, you might be shocked at the premium you are paying and how much it can vary. Not only do insurance costs vary from individual to individual, but they also vary for the same individual across companies. You might be wondering how that can be, and why?

An insurance company, despite coverage being a legal requirement, is a business. The more money they spend on claims, the less profit they make. Therefore, insurance companies like to insure customers who are low risks. Customers with higher risk profiles will pay more for their insurance premiums as a way to help offset the risk. This makes sense on the outside, but most people fail to realize risk factors. It’s easy to understand why someone with previous car accidents is a high risk, but someone with a poor credit score might not be as obvious.

The factors that determine risk are, for the most part, universal across insurance companies. However, each company performs its own research in order to determine risk factors and how much weight they hold. Therefore, each insurance company will use the same factors, but their own formula, and as such your premiums will vary. Additionally, there are many different insurance discounts available and not all insurance companies offer the same ones, and sometimes eligibility criteria will be different.

This is why it is a good idea to shop around and find as many car insurance quotes as you can. This gives you a good picture of how much you should expect to pay, or if you are paying too much. It also gives you as many chances as possible to find the best deal and highest discounts. However, on top of comparison shopping, understanding these risk factors in regards to insurance is important, as then you can adjust your life in order to become less of a risk in the eyes of insurance agencies. Here are some of the most common factors that go into determining your premium:

  • Age – typically, teenagers will pay the most for car insurance. Due to their inexperience on the road they are the group most likely to get into an accident.
  • Vehicle – certain cars are statistically more likely to be involved in accidents, serious accidents, and theft or vandalism. Avoiding these cars will save you money on your insurance.
  • Gender – unfortunately, like age, gender cannot be controlled. Nonetheless, men will sometimes pay more for their insurance policies due to the higher likelihood of car accidents.
  • Marital Status – it has been found that married people are less likely to get into accidents when compared to single people. Perhaps they feel a higher sense of responsibility, but there could be many causes.
  • Occupation – certain jobs are associated with less risk, as well as belonging to certain organizations. Teachers and veterans usually qualify for a discount.
  • Credit History – people with poor credit have been found to be a higher insurance risk. Although not immediately fixable, you can improve your credit over time.