How Do Insurers Determine the Cost of My Insurance?

There are many factors that affect the premium (cost) you will pay for insurance. The key to saving money and maximizing coverage is having good communication between yourself and your agent. Here are a few items to consider:

* Your Driving Record. Your agent will ask routine questions about accidents and moving violations for any driver covered by the policy for the previous five years. If you have previous violations, or have been in an accident where you were determined to be at fault, there may be an adjustment to the premium to offset the perceived risk. That’s why it's so important to get all the information you need to accurately compare policy quotes.
* Where You Live. This may seem strange to you. Why would where you live effect how much you pay? Insurance companies know that increased traffic leads to more accidents; therefore living and driving in a city may result in more accidents than living and driving in a rural area. It doesn’t mean you need to move to a farm, but you definitely need to pay attention when driving. A good driving record is the best defense against increased premiums.
* Gender and Age. That may not seem fair, but it’s based on statistics. History shows that males still have more accidents than females. So rule number one: as a group, the guys need to slow down and pay attention, because they are paying a little more for their insurance. Insurers also have statistics that show a higher number of claims for some age groups than for others.
* Marital Status. Once again, this is based on statistics. Insurance company claims records show a lower rate of auto insurance claims among married policyholders. So, if you prefer to remain single, nothing beats a good driving record.
* Prior Insurance Coverage. If you've previously been canceled for non-payment of premiums, insurers want to know. If you’ve had insurance, your new insurer may ask your prior company about any claims you had. The key is to provide as much as information as you can to your agent. This will allow your agent to place you with the carrier (insurance company) who has the best rates for you. One carrier may be competitive on one type of policy, but not on another. Your agent should have access to multiple carriers in order to get you the right coverage and the lowest rates. Not all agents and all policies are created equal.
* Mileage. The more miles you drive, the more opportunity for an accident. In other words, if you do a lot of driving, you may pay a slightly higher premium. Your agent will know which carrier is best for drivers who spend a lot of time behind the wheel.
* Type of Vehicle. If you want to drive an exotic car, you will pay more for the insurance. As the price of your vehicle goes up, so does the potential costs to repair it. The physical damage premium will be increased to cover the additional risk.