If you talk to people about their auto insurance rates, you will likely find that everyone pays different amounts. Insurance agents do not use a standard rate for everyone they insure. Instead, they use models and formulas to calculate rates for anyone that asks for a quote. They base the rates on many things, so knowing these things might help you understand why you pay the amount you do. Here are several vital factors that tend to drive up auto insurance premiums.
Your Credit Score
Most people know that their credit scores affect their ability to get loans, but they might not know that they also affect other areas in life. For example, your credit score might affect your auto insurance rates. If your score is low, you will likely pay more for auto insurance coverage. A low score represents a higher risk to your insurance company.
Your Driving Record
The second factor that drives up auto insurance rates is your driving record. A person with a history of driving violations has a higher chance of getting more. A person with a history of filing claims has a higher chance of filing more claims. As a result, you will pay more for your coverage if you have claims and tickets in your history.
You might also benefit by knowing that your vehicle affects your rates. Insurance companies do not issue quotes without knowing the type of car a person has. They need this information to determine how much to charge. Higher-value cars cost more to insure than older, cheap cars. Your agent will ask about your car's age, make, and model, as this affects your costs.
Your Age and Gender
Finally, you should understand that your age and gender also play a role in your rates. Men tend to pay higher rates than women because men have higher risks of accidents and tickets. Younger people also pay higher rates because they have increased risk levels. You can ask your agent to explain this more thoroughly if you have questions.
The Bottom Line: They Base Rates on Risk
If you factor these things into an auto insurance quote, you might notice they all have one thing in common: they determine a person's risk level. Risk is the primary thing that insurance agents care about, and they use these factors to determine your risk level. Your risk level helps them determine your auto insurance premiums. You can learn more about auto insurance rates by contacting companies like Kesner Insurance Agency Inc.