What Factors Determine Your Automobile Insurance Policy Rates?

Automobile insurance is determined by several factors. Learn what these factors are and how they will affect your policy premiums. Read what can cause your rates to go down, and what makes them higher.

Territory is a common factor. This is where the automobile will be parked and driven. This factor is used in every state except California they have laws preventing insurance companies from using this as a factor. Rural area residents pay a lower premium than urban residents. The reason being that in urban areas the accident rate is higher.

Your personal driving record has quite a bit to do with affecting your insurance rates. Accidents, tickets, and moving violations over a span of at least three years and up to seven years can count against you when determining your auto policy rating. Most insurance companies only go back three years on your driving record but, they do have the discretion to go seven years to ensure that you are not a liability.

Gender is also a factor. Auto insurance statistics have shown that females typically have a lower accident rate than men. Therefore, a male driver will pay more for auto insurance coverage than a woman due to previous accident reports.

Another auto policy rating factor is age. Most drivers are divided up into three catagories to determine what they will pay in premiums.

Drivers ages 16-25 will pay the highest premiums of all the age groups. The reason being that this age group in previous years filed the most insurance claims.

Drivers age 74 and over pay a little bit less than the previous age group. They are considered minimal risk to the auto insurance company. This means that they have a risk of being in an accident but, not as big a risk as the drivers in the age group of 16-25.

Drivers paying the lowest premiums based on their age is the group of drivers 26-73 years old. As this age group has the lowest recorded insurance claims and accidents between, all three groups.

Your marital status will also be a factor determining your auto policy rate.

Studies have shown that married couples have a lower number of insurance claims than the single driver. So, a single driver will pay a slightly higher insurance policy rate, as oppose to the married drivers.

Prior insurance coverage is a big factor in your auto insurance rates. If you just want to change insurance companies your rates will not change or will vary slightly. If you have driven without insurance, or have let your policy expire you may pay a higher insurance premium that a driver who has had continuous coverage.

Credit History is an auto insurance factor and one of the highest rated factor insurance companies use. Insurance companies have noticed a direct link between a driver's credit history to expect and determine future insurance claims to be filed by this driver. If you have a good credit history this is a sign that you are least likely to file and insurance claim as to a driver who has a bad or fair credit report.

The vehicle does play a role in your automobile insurance rate factor. The insurance companies uses the make, model, and body style of your automobile to determine your policy rate. How do they determine your rate based on these three attributes? They compare your automobile to a group of previously owned vehicles with the same make, model, and body size and you pay a rate based on the risk of this automobile being in an accident. If you have a vehicle know to be vandalized, stolen, and has a higher repair cost than most models then your premium will be significantly higher based on these features.

These are some of the main factors automobile insurance companies use to factor your individual insurance policy and premium. Automobile insurance companies do vary by state but, they all use these factors in determining your policy premiums and the possibility that you may file a claim in the future.