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Ever wondered why your friends have lower (or higher) auto insurance premiums than you do? Well, there are a lot of variables that go into it. When determining your car insurance rates, companies look at a range of different factors, from gender to employment status. Based on where you fall under each of the categories, the rate you’re given will often differ from your friend’s or neighbor’s. Here are just a few of the things that insurance companies look at:
According to the Insurance Institute for Highway Safety (IIHS), men are more than twice as likely to get into a fatal motor accident than women. Given that women are statistically less of a liability than men on the road, it is clear why auto insurance companies often provide female drivers with lower premiums.
Take two individuals, one married and one single, both with identical driving records and demographic factors, and compare their car insurance rates. Almost always you’ll find that the person who is married will get the lower premium.
Insurance companies determine that those who are married are more likely to be driving with a loved one in their car, and therefore will be more cautious when driving. Since this reduces the liability level, insurance premiums also see a reduction.
Where You Live
Those who live in rural areas where vehicle traffic is minimal are at an advantage when it comes to insurance premiums. Since it is less likely for an accident to occur in areas where fewer cars roam the road, insurance companies provide more competitive rates. If you live in an area with high amounts of traffic, it will likely cause an increase in your insurance quotes.
The Huffington Post reports that “according to the CDC, crash rates per mile driven for 16- to 20-year-olds are four times higher than those of older drivers.”
As a newer driver, those under the age of 25 will often have higher insurance premiums than those with more experience on the road. As the liability of age decreases, so will the rates that you receive.
If you’ve shopped around for car insurance comparison quotes, you know that insurance agents always ask for the number of miles you drive on a monthly or yearly basis. Since driving more miles means more potential for an accident to occur, those who have high levels of car usage generally receive higher premiums.
There are various employment-related factors that go into determining your insurance premium. These include things such as your career field itself, the stability in your current employment status, or how long you have been working at your current job. Insurance companies are likely to provide lower rates to those who have more stable and higher-paying careers.
Number of Accident Claims
For many drivers who have experienced this firsthand, it is common knowledge that the more times you file insurance claims to cover vehicle damages, the more likely you are to have higher rates. Since the liability of insuring your vehicle has a track record of being high risk, most insurance companies will bump up the premiums to compensate for projected losses.
The factors mentioned above are just a few of the many variables that go into determining your car insurance rates. Although there are some things we can control, like number of claims or car usage, there are many that we cannot, such as age or gender. Our suggestion? Minimize your perceived liability by changing the things that you can in order to reduce the extra costs that could be tacked onto your premium.