What Determines your Car Insurance Rates?

When shopping for car insurance, you may wonder what will determine the rates you are going to have to pay. There are several factors that are weighed by an insurance agent to determine the cost of the coverage you need to insure your vehicle. Pay attention to these important factors. If there are conditions you can affect to lower your insurance rates, take care to limit the factors that would lead to higher rates. If there are other factors that are beyond your control, understand those aspects of your insurance profile and be ready for the effect they will have on the cost of your car insurance.

Your age, marital status, and sex will play a role in determining your coverage rates. Those drivers over the age of 25 will receive preferential rates over younger drivers. So too will married drivers and women. The insurance rates are determined based upon the risks of drivers to require insurance payouts. Data compiled by independent sources and commissioned by insurance companies shows that male drivers who are single and under the age of 25 are at a greater risk to need insurance coverage than those who fall into the other categories.

Your credit rating also plays a role in determining your rates. Studies have shown that the level of a driver’s credit standing has a direct correlation to their likelihood to be involved in an incident that requires coverage by their insurer.

Other factors that contribute to determine your rates include where you live and where you drive. Statistics that reveal the safety of your location -- as well as how often you drive -- determine your likelihood of needing help from an insurer.

Finally, the factors that have a universal bearing on the amount of your insurance premiums include the make and model of your vehicle, the cost of the vehicle, and the deductible you choose. The make and model of your vehicle is weighed by considering whether you drive a sports car or a family sedan, whether your car is rated highly by independent safety bureaus or whether it performs poorly in safety tests. The cost of your vehicle plays a role in that the cost to repair or replace a more expensive car will be more expensive to an insurer should the need arise.

Your deductible is the amount that you establish as a threshold for a claim before the insurer is obligated to provide funds. If you establish a $1,000 deductible, you are required to pay for damage to your vehicle up to $1,000. A lower deductible will yield higher insurance premiums as a higher deductible setting will elicit a lower insurance premium payment.