Critical factors that affect auto insurance rates


Each state has its own set of rules and regulations pertaining to auto insurance. The Insurance commissioner is the one who decides the minimum required for each state. Since, every state wants its residents and pedestrians to be safe on the roads, the rules have been written specifically for each state in order to protect the motorists on the highways. Hence, purchasing an auto insurance policy is in everybody’s interest and is mandatory.

Some states decide the mandatory minimum liability rates according to the financial responsibility laws. In these states, the driver has to show proof that he/she has the financial resources to make the payment in case of any damage that is caused by the driver of the vehicle.

There are a number of factors that affect auto insurance rates such as:

  • Age – According to the available statistics, drivers who are below 25 years of age are considered to be high risk and are charged hefty premiums. However, the married individuals are considered to be far more responsible compared to bachelors and spinsters and hence the premiums charged are much less. The drivers who are over 50 are generally charged lesser premiums as they have enough experience on the roads and are considered to be mature drivers.
  • Gender- Women are generally considered to be safe drivers when compared to men and hence the premiums charged are always much lesser than what the men have to pay.
  • Area – The place where you live in will also make a difference when the premium is calculated. If you live in an area where there is lot of traffic, then there are more chances of being involved in an accident. Hence, the premiums that are charged will be much higher when compared to the premium charged if you were to live in a rural area, where there are lesser number of vehicles on the roads and fewer accidents.
  • In case you stay in an area that has a high crime rate, then the premiums are bound to go up. Theft and vandalism prone areas are considered to be high risk areas and the number of damages and claims are always high. All this is taken into consideration while writing the policy.
  • Driving record – Having a clean driving record is certainly advantageous. It will help in sending the message that you are a responsible driver and that will help in fetching some discounts. However, a bad record with a lot of violations will indicate that you are a high risk driver and the premiums will shoot up.
  • Model and make – If you have to insure a car that is an expensive one, then your premiums will skyrocket. However, insuring a cheap car or insuring an older model will not cost much. In fact, insuring a sports car is very expensive and is likely to burn a hole in your pocket. This is due to the fact that these cars are more likely to get stolen.

It is important to bear all these things in mind while shopping for auto insurance. Shopping online and comparing quotes is the best way to go about it.