3 Important Factors In Setting Florida Car Insurance Rates

The economic downturn has seen rising prices throughout the economy, but nowhere is this more evident than in the cost of car insurance. Rates have risen more in some states than others; however, Florida car insurance rates have seen some of the steepest and most rapid increases in the country. When purchasing insurance or renewing a policy, it's good to be aware of some factors insurance companies use to set car insurance rates. Some of the factors, such as age, are not under a driver's control. Knowing about others, like how a company goes about assessing vehicle damage, can help a policy buyer minimize costs. Here are three important factors companies use in setting rates.

While a driver can't change his age, one factor under his control is the vehicle he drives. Expensive cars cost more to insure; a Mercedes driver pays a higher premium than a Ford driver. In the event of an accident with an expensive car, the insurance company sets about assessing vehicle damage immediately. Has the car been totaled or is it repairable? Either way, the more expensive the car, the more it costs to replace or repair. Companies account for those increased costs by charging drivers with expensive cars a higher premium. Ask the insurance company what yardstick it uses when assessing vehicle damage to classify a car as 'totaled'. Having an insurer total an expensive car can end up costing a driver money in replacement costs and diminished value.

The risk a driver presents to a company is a key factor in determining insurance premiums. A driver's basic profile is programmed into a company's database and combined with historical records and patterns to arrive at the risk he presents. Such things as length of being licensed, occupation, annual mileage driven, car value, age and driving record are used to compile a risk score. While each company may use the same basic input data, how it applies and uses the data can vary among companies. Comparison shopping and getting multiple quotes may turn up a significant difference among Florida car insurance rates.

Most drivers aren't aware their credit scores are also a major factor in how rates are set. Called credit-based insurance scores, they are compiled from loan and bill-paying data on record at the major credit bureaus. The credit score then is factored into the risk score and used to set the driver's premium. Not all companies use credit-based scores so drivers should ask and shop around.

Car insurance rates are high and going higher in Florida. Comparison shopping and knowing how rates are calculated can help a driver make the best decision on coverage.

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