Learn how auto insurance companies calculate your premiums


This is one question which is asked by every driver on the road. If you know what exactly goes into deciding your auto insurance premium, then you can easily make amends to your ways and get the rate fixed. Though no one can give you an exact picture of what goes into your insurance rate, you can get a vague understanding. We shall try and delve into the intricacies of calculating the auto insurance premium.

The driver’s age plays a huge role in deciding the rate. Younger drivers are considered to be riskier prospects when compared to middle aged drivers. Statistics also show that drivers under the age of 18 are more likely to meet with an accident than a 30 year old driver. This is pretty obvious; it does not take a rocket scientist to figure out why this is so. Youngsters lack experience and hence are more likely to get into accident prone situations.

Also, older drivers over the age of 60 tend to have slower psycho-motor coordination speed. This results in a slower reaction time. Hence even older drivers tend to be charged a higher premium by their insurance companies.

The type of car that one drives also decides the auto insurance rate. Sports cars are considered to be high risk category. This is because these vehicles are made for speed and it is assumed that anyone who buys these vehicles will want to drive it fast in order to utilize its full potential. Hence it is always prudent to go in for lesser known sports cars if at all you feel the need to get one.

Even classic cars are charged a high auto insurance rate. This is because they have been around for a really long time and hence fall in to the high risk category. Classic cars can break down at any given time without warning and you are going to expect the insurance company to pay for it. In order to compensate for this uncertainty, the insurance companies are going to charge you a premium to insure your classic car.

Your driving history or driving record will also play a large part in deciding your premium. If you have a very colorful driving record with a lot of tickets, you are obviously going to be paying a lot more premium. Make sure you maintain a good driving record. This can be done by paying more attention to traffic signs, driving within the speed limit and making sure you do not wreak havoc on the road.

Also enrolling in a defensive driving class can help in improving your driving skills. It will teach you how not to get into tricky situations which might lead you to have an accident. Not only will this class be beneficial to your driving skills, it will also help you convince the insurance company that you are serious about safe driving.

The value of your car also makes up a part of the decision making process when it comes to your auto insurance rates. A costlier car is going to be more expensive to insure because it is going to be more expensive to repair if and when it is damaged. This gives you just one more reason to go for a cheaper car. Remember, a costlier car is not only costly upfront; it is also more expensive in the long run.