The question of how much you will have to pay for auto insurance coverage is a very common one among consumers. There is no single answer to this question, however, since rates are determined based on a number of factors. Each company sets its own rates for coverage as well, which means that a driver will see a range of prices for the same type and level of auto insurance from different providers.
Auto Insurance Rates and Risk
When auto insurance companies are setting rates for policyholders, they do so based on the level of risk that an applicant presents. Each driver who applies for coverage is evaluated and placed into a category for car insurance purposes. All drivers in the same category share similar characteristics, which allows the insurance company to set pricing for a large group of consumers.
Insurance companies also vary in the amount of risk they are prepared to assume on behalf of their policyholders. Some companies have a very low tolerance for risk and as a result, will either refuse to provide coverage to drivers are more likely to be involved in accidents or charge higher rates to policyholders in this category.
Factors Which Determine Auto Insurance Rates
When an auto insurance company is setting rates for its policyholders, it considers a number of factors, including the following:
- Driver’s age and gender
- Driver’s marital status
- How long driver has been licensed
- Where the driver lives
- Make and model of the vehicle
- Annual mileage
- Type and level of coverage requested
The insurance company will also look at an applicants driving history as part of the underwriting process. Drivers who have been involved in accidents or who have accumulated moving violations are more likely to repeat these events and make claims against their policy. Since the insurance company wants to evaluate the level of risk that a driver presents, people who have already been involved in an accident are rated higher than individuals who have been licensed for several years and have maintained a clean driving record.
Discounts Available on Auto Insurance Coverage
When shopping for auto insurance coverage, a driver should make a point of asking about the type of discounts which the company offers. It is possible for a driver to qualify for more than one discount on his or her coverage.
One of the most common price breaks offered by auto insurance providers is a good driver discount. Companies reserve their best rates for drivers who are accident and claims-free.
Buying a homeowners and auto insurance policy from the same company is another way to qualify for a discount. A number of companies offer multi-policy discounts to customers, and they may even give preferred pricing to policyholders who insure more than one vehicle.
Buying an insurance policy online is another way to save on coverage costs.Filling out an application electronically means lower administrative costs for the company, and the savings are passed on to the customer.