October 7, 2011

The Top 5 Factors That Affect Auto Insurance Rates

Car insurance is required by law to drive on the roads in the United States. Some form of coverage is expected from all drivers to keep everyone safe while driving. Auto insurance rates can vary significantly when compared to other people and car insurance companies. Understanding the factors that influence the price when looked at by a car insurance company is important when trying to find the best prices and plans. There are several things that insurance companies look at when determining the price for coverage, but there are five major factors that can have a big impact on the car insurance rate.

The type of car is the first thing that a car insurance company will look at. Some cars are more expensive than others to fix or replace and this will be reflected in the car insurance rate. Sports cars and foreign cars tend to cost quite a bit more when they need to be repaired after a collision. The insurance company makes up for that by charging a higher monthly fee to the driver for coverage.

Any tickets that a driver may have in the past will impact rates. Drivers that have tickets on their record will have higher rates than drivers with a clean record. This is because people that get tickets are assumed to be people that engage in risky driving behavior. Risky driving behavior leads to more frequent accidents.

The age of the driver is another very important factor to insurance companies. Drivers that are under 25 are considered much more risky than drivers who are 25 or older. The insurance companies use accident statistics in age groups to make this determination and charge younger drivers more.

Previous accidents have an impact on auto insurance rates. Accidents stay on a driver's record for a few years depending on what state he lives in. This prevents accidents from several years previous to continue to affect insurance rates if the driver has proven to be safe since the incident. Insurance companies look at accidents and see that those policies were paid out on in the past which makes them prepare to pay out on a current policy. This is why the rates will be higher while an accident is still on the record.

Gender and marital status are the fifth major factor behind the costs of insurance. Statistics say that women are safer behind the wheel so they are generally charged less. Statistics also show that married people are involved in fewer accidents than single drivers. This brings down the rates for married couples.

Several other factors go into the final determination, but these five have a big impact on pricing.