Industry sources say that auto insurance companies rely on different factors to determine premiums. These factors contribute greatly to the insurance costs that car owners have to shoulder. Credit scores, driving records, and the make and model of the car all come into play when insurance providers assess a potential customer and come up with rates.
Experts contend that one of the most influential factors is the kind of car policyholders drive. Insurers typically base rates on the risks involved with certain car types. For example, high performance sports cars are more expensive to insure compared to modest cars. Large SUVs also represent more of a risk, earning them high premiums.
While some companies place more emphasis on the car owner’s credit history and his or her ability to pay, others prioritize the specific car models used by policyholders. Of course, insurers also pay close attention to the motorist’s driving record. A blemished or tarnished record would eventually mean higher premiums.
Specifically, car insurance providers assess the type of vehicle based on several other factors. The replacement factor of the car is crucial for insurers to see how much it would cost to replace the vehicle if it is stolen or destroyed. Cars that are more expensive are more expensive to replace. Because of this, premiums usually skyrocket.
Auto insurance companies also consider repair factors when coming up with quotes or rates. Vehicles whose parts are more costly can yield higher insurance costs for the car owners. Some car parts are more expensive than others, experts contend. Vehicles built in fewer numbers can often mean more expensive replacement parts. The weaker demand for car parts can also drive prices higher. This in turn forces insurance premiums for that particular car model spike.
Installing safety features on the vehicle can help force premiums down. Providers often look kindly on car owners who prioritize their safety and the safety of their passengers. Adding features like four wheel drive transmission, side air bags, and even anti-theft systems can convince insurance companies that policyholders are doing everything to minimize the risk of car theft or physical injuries in the event of an accident.
The car’s condition will also play a crucial role in how insurers determine insurance rates. Drivers can drop comprehensive and collision coverage especially if their cars are already aging. These additional options often cost hundreds of dollars more. In most cases, car owners can save more money by paying for repairs from their own pockets.