The way insurance coverage works is very interesting. Two people buying the same car in the same city might not get the same insurance premium rates. The same person, buying the same car in two different states might not get the same rates either. Of course, insurance rates will vary within a city, for the same person depending upon the car too. Insurance rates depend on a single bottom line of how much risk is involved. If there is a risky scenario and there are chances of claims, then the premium goes up. If it is a safe bet where the chances of future accident claims are very low, then the premium will come down. Here are some of the parameters that will therefore decide how expensive the coverage will be.
The make of the car
If it is a brand new SUV, there are two kinds of risks involved from the insurance provider’s perspective. Firstly, one would be tempted to drive very fast, increasing the chances of an accident. Secondly, the damage repair cost for an SUV would be very high. So, the premium for the auto insurance coverage of such a car would be very high too. That is the reason the lowest rates are usually offered to medium range family sedans which are safe and not so expensive either.
The profile of the car owner
The profile of the one behind the steering wheel has got a lot to do with the insurance rate. For example, someone who hasn’t violated a single traffic rule in more than 3 years is less likely to be involved in an accident and vice-versa. Similarly, someone who has an excellent credit history can be considered responsible, consistent and mature in the way he handles things. These are two indicators that such a customer is a safe bet and can be offered low rates for auto insurance.
The chances of an accident
If you drive less, the chances of being involved in an accident are low. So your premium goes down. It will also go down for a city where the roads are good, weather conditions are usually fair and the number of vehicles is low. All these conditions suggest that there will be fewer accidents. Lastly, someone who is less likely to drive often, such as seniors or housewives, will get discounts which working professionals commuting daily to work wouldn’t get.
