Most drivers are very concerned about the amount they need to pay to receive adequate auto insurance coverage. It is therefore important to better understand about auto insurance rates. Let’s discuss some further details here.
Auto insurance rates determine what you will pay for particular kinds of insurance coverage. There are many types of rates for each company and they can vary greatly depending on many factors. We’ll discuss some of these factors here.
Each insurance company has their own set of rates and they must typically be registered with a State insurance regulatory agency. However the rates are determined for each customer and they are based on many factors.
The first area which impacts the rates are the drivers covered in the policy. In general the rates are lower for more responsible drivers. So if a driver is over 25 and has a safe driving record, he/she normally can qualify for special rates. On the other hand, a driver who has had many accidents would tend to have to pay higher rates. The rates for younger drivers are also higher since statistics have shown that these drivers have a higher incidence of problems due to their lack of experience and expertise.
Some companies also look into the background of a driver and use credit scoring as a way to judge the rates. This particular scoring technique has been met with a lot of resistance. Nevertheless many insurance companies continue to use this as a way to determine some rates for drivers.
Another factor which influences the rates a driver pays is the vehicles to be covered. Insurance companies have different rates depending on the safety rating of the vehicle. They feel they can provide a lower rate if the vehicle has been proven to be safer for drivers and passengers than other vehicles.
The rates are also influenced by the value of the vehicle. If a more expensive vehicle is damaged or totaled, the repair cost would be higher than a less expensive vehicle. It has also been found that some vehicles cost less to repair than others so this factors into the rate calculation as well.
And the area where the car will be garaged and primarily driven plays a big role in the rates which insurance companies charge. In general more densely populated urban areas have higher rates than suburban or country type settings. The insurance companies assess the accidents rates in different areas and use that in factoring their rates.