If you have ever comparison shopped for car insurance online, you may have been left scratching your head in wonder of how exactly insurance agencies come up with these seemingly random rate quotes. This is especially confusing when you have answered the same questions for multiple insurance providers and gotten back drastically different rates. While each insurance company uses their own unique formula for calculating rates, the same basic components have an effect on your rates.
Driving Record
Your past experience behind the wheel can greatly affect your car insurance rate. Experienced drivers with no past accidents or tickets will get a much better rate than a newly licensed driver or someone with accidents and tickets on their records. People that have a DUI charge will have a hard time finding an insurance provider, as many insurance companies will not take the risk.
Type of Vehicle
The type of vehicle that you drive will impact your rate. Cars that lack necessary safety features or commonly attract drivers that speed will have higher costs of insurance. Insuring very expensive cars also will increase the rate if you opt for full coverage insurance.
Use of Vehicle
How you use your vehicle will affect the price of your car insurance policy. If you live in a major city and drive in rush hour traffic to get to and from work you will find you have a higher insurance rate than someone who lives in a very rural setting and uses their car to run the occasional errand.
Your Credit Score
How you pay your bills can make a big difference when determining your car insurance rate. Companies give better pricing structures to people who show a consistent ability to pay their bills on time.
Type of Insurance Coverage
The amount of insurance you purchase will directly affect the total of your quote. Added coverage such as comprehensive, collision, uninsured motorist and road side assistance all add additional fees to your car insurance premium. One great way to offset these costs is by setting a deductible higher than the minimum amount. As a general rule, the higher the deductible is set the lower your car insurance rate will be.