We often have a picture in our minds of what our auto insurance will cost us, an ideal cheap rate that we can afford while still maintaining a good amount of coverage in the event of an accident. Unfortunately though there are many factors auto insurance company’s use to calculate our rates that we are unprepared for and it will surprise us will the bill comes. So, what are some things you should know about auto insurance factors that will affect your rate?
The largest factor the auto insurance companies will use to calculate your auto insurance premium rate is your driving history and accident history. Basically it comes down to the fact that the less accidents or auto insurance claims you have in your history, the cheaper your rate will be.
Why? Well because it shows that you are a lower risk for the auto insurance company and therefore they will make money off of you instead of losing it. If you are in the habit of filing a lot of auto insurance claims, they will think that you are basically a hole to throw money in.
That even though you may pay your premiums, it will cost them more in the end and they are a business out to make money. Some companies will lower your rate after you have been with them for so long without any accidents, but not all.
Another large factor in calculating your auto insurance rates is your age and driving experience. Someone who is sixteen years old with no driving experience will have a much higher rate then that of someone forty years old with twenty years of road experience. Basically, the auto insurance companies have no criteria with which to base their rates because they don’t know if you will turn out to be a responsible driver or not.
So if you are between the ages of sixteen and twenty-five you will find your rates are more expensive. They may go down after you have been with the same auto insurance company for a few years.
On the flip side of this, of course, is the elderly. Due to their increased medical conditions and decreased sight and hearing, their auto insurance rates are generally also higher then people of middle aged years. Though, if you fall into this category, it might be worth looking into companies that specialize in ensuring people over fifty-five, as these companies believe in insuring people with many years of driving experience, so they will give you a lower rate then others.
Another factor in your auto insurance premium rate is your credit history. This is one most people are not aware of, but the auto insurance companies’ are just like any other company and they want to be assured that when they provide you a service, that you are financially able too and financially responsible enough too.
If your credit rating is low enough, they may deny you coverage or only give you the basic amount of coverage to allow you to legally drive, and they will charge you a lot for this. One option you have in this situation is state run auto insurance pools, they will only give you the basic amount of coverage, but they won’t turn you down and may not charge you as much.