How does geographical area and driving record impact insurance premiums?


Paying for auto insurance will seem like a burden if it is not understood as to what the insurance companies are charging for. Generally the model of the car has a big role to play when deciding premium rates, but there are several other factors that come into picture when insurance companies come up with a number for monthly premium rates. Some of the factors which are partly responsible for high premium rates are listed below:

Geographical area related:

Quotes from two insurance companies from different areas of the country are never the same. Here are a few reasons for this varied premium rates:

  • Geographical areas that are more prone to natural disasters and extreme weather conditions have higher premium rates, due to the damage they cause to the property and automobile. Areas which are exposed to hurricanes, earthquakes, tornadoes, even extreme snowfall or rainfall with hailstones are charged a higher premium rates.
  • Cities which are overpopulated have a higher rate of insurance than country side, because the number of cars running on the roads is dramatically high. With higher number of cars the probability of accidents are higher too.
  • Cities or even areas that are prone to vandalism and riots and that have higher crime rates are charged higher premium rates than other areas. Vandalism and riot prone areas have a greater possibility of property and auto damage. Higher crime rate means the possibility of cars getting stolen are high.
  • Areas prone to accidents like hilly areas and the likes are charged higher premium rates. Insurance companies depend upon the statistics to decide the premium rates based on the current year conditions.

Driving related:

Driving records of every individual has a big role to play in deciding the premium rates. This is something within the complete control of the individual and can be changed if necessary over time.

  • Reckless driving, or traffic tickets like speeding tickets or even parking tickets can earn extra rates on the monthly premium rates.
  • Points taken from the driving license is immediately reflected in the records of insurance companies, and the premium rate will be increased.
  • Accident history on the driving license will increase the premium rates. But if the accident has occurred years ago, and the driving record is clean since then, it will not affect the monthly premiums.
  • If a clean driving record is maintained for a complete year, then the insurance companies reward such customers with extra discounts for the following year.