How Do Insurance Companies Calculate Auto Insurance Rates?

Answer:
Insurance companies look at a number of factors when calculating your auto insurance rates including

how long you’ve had your driver’s license, how many miles you drive annually, your driving record, where you live, the type of car you drive, and even your credit history.

For example, a teenage driver is considered a risky driver and will cost more to insure than someone with twenty years of driving experience. If you only drive 10,000 miles each year, your insurance should be less than someone who drives 80,000 miles per year because you are on the road a fraction of the time. If you have a history of accidents and speeding tickets, you will pay the price in increased premiums. If you live in an area where the insurance company has experienced more than average losses, your rates will be higher. Expensive cars and sports cars cost more to insure than economy cars.

Your credit score is also looked at when determining risks. The theory is that people with clean credit are more responsible in general than those who have bad credit and therefore less of a risk.


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