If you are wondering how car insurance rates are computed, you must understand that the rates are determined by various factors. These factors have the ability to either increase or lower your insurance rates. Here’s how, but not necessarily in order of importance.

Do You Have a Clean Driving Record?

Considered to be the most influential factor in either increasing or lowering the rate of your car insurance, your record shows how responsible you are as a driver. It also determines the risk involve when you hit the road. In insurance, the general rule of thumb is the lower the risk is, the lower the rates can be and vice versa.

If you have a clean driving record, you can expect that your car insurance rate can be lowered.

Frequency of Auto Usage & Mileage

Obviously the more frequent you use your car the more likely it is to be exposed to risks and accidents. On the other side, if you use your car les frequently, the lesser is the likelihood that you will be making insurance claims. Insurance companies follow a classification for frequency of usage and mileage in underwriting one’s auto premium rates.

Auto Details

Premium rates are also dependent on the following auto details: make and model, year the vehicle was manufactured, how much the vehicle cost, classification of the vehicle. When you have installed safety devices into your vehicles, this also determines and lowers the rate of your insurance.

Your Personal Information

Your information as an assured is a determiner in underwriting your auto insurance rate. These are your age, gender, civil status, location, experience in driving, location, education and work, and even credit background.

Insurance companies usually consider individuals who are above 25 years of age as more mature drivers, and those above 50 years of age as safe drivers. Female drivers also generally get discounted rates as compared to their male counterparts. Your location is also a factor. The rates can go up or down depending on the risk level of the area where you live.

Education and work also influence the kind of rate that you will get. Similarly, your credit background may be considered in determining your car insurance rate. If you a good credit history, you may enjoy discounted rates.

The above are among the factors that determine the rate of your car insurance. Insurance companies calculate the risks involved and come up with your premium that corresponds to the risks. Factors for the car insurance rates may vary from one insurance company to another, but there are also standard rates that these companies are mandated to observe. Basically, what determines your car insurance rate is the amount of risk that is involve.

Knowing the factors that determine your auto insurance rate can help you in lowering your premium the next time you shop for your insurance. Getting discounted rates mean that you have to observe certain things such as driving defensively for a clean driving record, or installing safety devices into your vehicle among others.


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Source: http://www.insure4usa.com