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What Factors Determine Your Auto Insurance Rates?

Posted in Car Buying, How To, Lists, Rants & Raves by Kurt Ernst | April 19th, 2011 | 3 Responses |

Here's one...

Getting a quote for car insurance used to be simple: you’d call up an agent, give him your age, sex, marital status, inseam length, body mass index and frequency of fingernail clipping, then he’d punch the numbers into a calculator and quote you an annual rate equivalent to the gross national product of Bolivia. Unless, of course, your were trying to insure something with more than 30 horsepower, in which case your rates would be substantially higher. Thanks to the information age we now live in, car insurance rates are based on a lot more variables than they used to be. For most people, that’s good news that potentially results in a cost savings. For others, it’s bad news since things like your credit score now impact your auto insurance rates. Car-insurance.com has taken the mystery out of calculating car insurance rates, so below are the factors and their weights that go into setting them.

Driving Record And Claim History, 35%

This is fairly self-explanatory and obvious; lots of tickets and accidents on your driving record translates to high insurance costs.

Age And Marital Status, 25%

Like it or not, older, married people crash fewer cars than younger, single people.

What You Drive, 13%

Another obvious one: your insurance quote on a ten-year old minivan is going to be a lot lower than one for a new Corvette ZR-1.

Where You Live, 8%

Live in a city? Expect higher rates than someone living in the country, especially if your city has a high theft rate for vehicles. If you live in either Texas or California, which account for 1/3 of all auto thefts in the U.S, expect car insurance to be expensive.

Gender, 5%

You can call it profiling or call it discrimination, but insurance companies call it fact: statistics show women have fewer moving violations than men, hence they benefit from cheaper insurance. Women also drive cheaper cars than men.

Your Insurance Company’s Rate And Your Policy, 5%

Just as in every other type of business, some companies simply charge more than others for an equivalent product. The amount of coverage provided by your policy also determines the rate: higher limits of coverage are (obviously) more expensive.

Your Deductible 4%

This is all about risk versus reward: the more risk you’re willing to take, in the form of a higher deductible, the lower your insurance policy cost will be.

Credit Rating, 3%

These days, your credit rating determines everything from loan eligibility through whether or not an employer will even consider you as a candidate. It impacts your car insurance rates, too, but not nearly as much as most other factors.

Occupation, 2%

Are you a scientist, pilot, artist or actor other than Charlie Sheen? Congratulations, you get a lower insurance rate than doctors, lawyers, real estate agents and business owners.

Theft Protection Devices, 1%

Do you park your car outside or in a garage? Does your car have an alarm, or do you use a layered security approach including things like The Club? Make your car harder to steal, and your insurance rates will go down.

Here’s the bottom line: changing your gender isn’t cost effective, and getting married doesn’t always work out for the best. Try to avoid moving violations and accidents, drive the blandest car you can and pay attention to your credit rating if you want affordable car insurance. On the other hand, no one ever looked back on their deathbed and said, “I’m damn glad I bought that Grand Caravan instead of the 911, just to save money on car insurance.”

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3 Responses

  1. 68SportFury says:

    I’m still trying to figure out how there was a $150 difference between the number I was given when I asked for a quote on a “2011 Dodge Charger V6″ and the number I got when I called up to say I’d bought a “2011 Dodge Charger V6″ and gave the VIN. They said “There must be something in the VIN that made it higher.” Well, I know what information is in the VIN and I kinda doubt that. Unless my car somehow ended up with a Hemi R/T VIN by mistake…

    • Kurt Ernst says:

      That’s what IT people know as an “1D10T” error. In other words, the first agent who quoted you was an idiot.

  2. PFULMTL says:

    classic picture.