Determine Your Car Insurance Rate

Basically a variety of factors determine how auto insurance companies determine your rates. The key criterion: "risk". In other words, the riskier the cost of covering you, the higher the premium you are going to pay. Let's admit, the auto insurance industry is a multi-billion dollar business and coverage providers are certainly not in for charity. In fact, most insurance companies would have complex statistical tables and models that will help them pinpoint their probabilistic profitability.

Reverting to the question about how auto insurance companies determine your rates, well, the answer is not that complicated, but the number of factors that go into the decision making process are comprehensive and so we list a few important ones that play a significant role in how auto insurance companies determine your rates:

• 1.The car itself. It takes just about common sense to understand that the car itself plays a critical role in helping auto insurance companies determine your rates. Within the umbrella of the vehicle, the decision is based on the year of production, make, exterior, engine capacity, and other vehicle-related factors. The more safety features your vehicle is equipped with, the lower your rates will be.
• 2. Location, location, location. Insurance companies may also consider your geographic location in the decision mix. If there are numerous accidents within the area where you live and drive, in all likelihood you are going to pay a higher insurance rate, because the insurance company may look at your proposition as being "too risky."
• 3. The package. In addition to risk factors, the package you choose will also influence your insurance rates. For example, if you choose a higher deductible your insurance company may offer you a lower rate.
• 4. Regulatory mandates. State regulations governing the kind and amount of coverage required is also an important criterion that goes into how insurance companies determine your insurance rates. Some states have strictly-defined minimum coverage requirements
• 5. Your driving record. Duh! Well, if your driving record is not-so-stellar, you should expect to pay a higher insurance rate in contrast to what you would have to pay if your driving history was "clean". In other words, the more claims you have on your record, the more likely it is that the insurance company will perceive you as a "high risk" candidate and consequently charge you a higher insurance rate.
• 6. You! Not a surprise, right. Your driving record, age, marital status, credit history, education -- all of these may be variables that your insurance company may consider while determining your insurance rates. The less risky you come across (based on complex algorithms), the lower your insurance rate. Consider the following hypothetical:

Let's assume you are a single, 25-year-old, recent grad and your neighbor is a 34-year-old, married father of two. Whom do you think is the insurance company going to perceive as "less risky"? You

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