How is my Automobile
insurance rate determined?
Your automobile insurance rate is determined by the following factors:
- your driving record
- your usage of the car, how you are using the vehicle, work, pleasure,
business
- how many drivers you have and their ages
- how many vehicles you have
- what kind of coverage limits you want
- what area you live in
- your payment history
- what color car you drive
- your insurance credit score
- your claims history
- your occupation and how many years you have lived at your current
residence
- your daily, weekly, annual mileage
There is a lot of information about you that is used to determine your
rates. You are grouped or pooled together with similar drives of the same
background that way you are not paying for drivers that are much worse than
you.
Similar risks will pay similar rates
Your usage affects your rates because if you are driving to and from work
or school 5 days a week, 15 miles one way you have a higher chance of getting
in a accident than someone who only drives 1 mile 1 way 3 days a week or
someone who works from home and only drives to get groceries. So business,
work, and school usage is higher than pleasure usage.
The area you live in affects your rates due to the fact that one area or
town may have a higher incidence of claims than another area. One area may have
higher lawsuit payouts or higher theft rates than another area. Even if you
live in a affulent area your rates may be higher due to the higher value
vehicles in your area cost more to fix than in an area with lower value
vehicles.
Although you may have heard that if you drive a red car you will pay higher
rates but this is not true. It is a myth. GEICO, USAA (For Military Only), and
Allstate, to name a few, don't even ask what color car you drive when you apply
for a quote. And your VIN number doesn't give this info either.
If you have one car and three drivers you will pay more because that car
will get used alot more than if you had only one driver and one car.
If you have had a poor payment history or your policy has cancelled due to
non payment you will have higher rates when you try to reapply for insurance.
The higher your insurance credit score the better. The insurance credit
score is similar to your FICO credit score such that the higher your FICO score
the lower your interest rate and the higher your insurance credit score the
lower your insurance premium.
Your claims history will affect you for a minimum of 3-years. If you have
filed a claimed or if you even mentioned a claim to your insurance company it
can and most likely will affect your rates.
reprint permission from
GoArticles.com & Chris Terna
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