7 Factors That Insurance Companies Consider
Automobile insurance companies take a great deal of information into consideration when they determine what your premium will be. Here are some of the factors that are used, and why they matter:
Many people do not know that insurance companies base auto insurance rates on where their customers live. So, if your geographic location exhibits large numbers of claims or high rates of theft or vandalism, in order to offset these costs, your rate will likely be higher. Where you park your car (on the street or in a garage), as well as anti-theft features present on your vehicle, can affect your rates as well.
Age, Gender, and Marital Status
The more driving experience you have, theoretically the less likely you are to cause an auto accident. That is why adults above the age of 25 generally pay lower insurance premiums than teenagers and young adults. Gender also plays a role, and statistics indicate that male drivers are more likely to be involved in automobile accidents or drive while under the influence of alcohol or drugs than their female counterparts. And auto insurance carriers often insure married drivers for a lower cost, believing that they are less likely to crash than motorists who are single.
The Vehicle You Drive
The value of your vehicle as well as engine size, overall safety record, and how much repairs cost will also affect what your insurance premium will be. Safety is usually a major consideration, and vehicles that score higher in crash tests will normally cost less to insure.
How Much You Drive
Auto insurance companies have a tendency to charge higher premiums to drivers with higher annual mileage since the more someone drives, the higher the chance that they will be involved in a collision. So whether you commute long distances for work or drive only occasionally, your rate will be affected.
Your Colorado Driving Record … and Auto Accident History
Not surprisingly, your driving record plays a significant role in determining what your auto insurance premium will be, and traffic violations, accidents, or previous claims will likely jack up your rates. You could also pay more if you’re a new driver who doesn’t yet have an insurance history. Rule of thumb: the cleaner your driving record, the lower your insurance premium will likely be.
Gaps in Coverage
Since automobile insurance is required in all states, insurance companies consider anyone who allows his coverage to lapse (even for only a short period of time) to be riskier to insure than someone who has kept consistent coverage, even if they’ve changed carriers.
Type and Amount of Coverage
The limits on your auto insurance coverage, the amount of your deductible, and policy options such as collision and medical payments coverage, will affect how much you’ll pay for coverage. But that is not to say that going as cheap as possible is the right thing to do — you need to satisfy Colorado state insurance minimums and have sufficient limits to protect your assets if you’re found liable for an accident.
Where automobile insurance is concerned, it’s always a good idea to shop around with several insurers before you buy. Compare rates as well as coverage to ensure that you’re getting the best deal, and the best protection when you need it.