Car insurance rates and the factors affecting them
If you have ever taken the time to shop around for vehicle insurance you probably know that the rates you will be charged with depend on a wide range of factors. And depending on the data you specify in the quote form the policy you will want to purchase may end up being very expensive or very affordable. So in order to get the best rates possible it is very important to know what affects insurance rates in the first place. It may seem like information without a particular significance however it will certainly help you shop around more effectively and save more money by doing it. So what does affect insurance rates?
Despite the fact that all companies use different methods of calculating their rates the insurers use the same set of factors to determine how much it will cost for a particular driver to insure his vehicle. While some of these factors may seem strange from the customer's point of view you should remember that the most important thing for the insurer is the risk involved in covering a particular driver. And each factor used by the insurance companies and indicated in the quote form lets the provider asses the risk and set his rates accordingly.
There are two sets of factors that determine the risk for the insurer. The first set concerns all the details of the car being insured: its make and model, production year, modification, safety features and ratings, repair costs, theft rates, potential harm to passengers and damage to other vehicles in the course of the accident, top speed, engine volume and other less significant things. These factors help the insurer determine the general probability of the car ending up in the accident and the approximate value of the claim being filed. For example sports cars are more prone to ending up in accidents than luxury vehicles, yet the latter have more significant costs involved when insuring them. So the company wants to know from the start what will be the cost involved in insuring a particular vehicle.
The second set of factors refers to the person willing to get coverage for their vehicle. These factors help the insurer determine how it is likely for that person to file a claim, since there are many links drawn from statistics that reflect such a risk. So when buying car insurance you will be asked to indicate your age, gender, place of residence, education, driving record, credit rating, marital status and other optional data that is usually used for statistics. All these factors give the insurer a clear idea of whether the person will use car insurance coverage often or won't need any coverage at all for a long period of time. And the rates will be set accordingly. For example people with higher education are less prone to end up in accidents while people with a poor credit rating file insurance claims more often.
Keep all these things in mind when looking for car insurance. The good news is that each company uses different weight of factors in their formulas. So if there's a particular factor that isn't as favorable as you would wish to there are still companies that will pay less attention to it. And your aim will be finding such a provider when shopping around for car insurance.