Insurance premiums are calculated using a wide variety of factors. Insurance companies look at your various risk factors and then calculate a premium based on how likely you are to get in an accident and make a claim on your policy. Here are a few of the risk factors that insurers look at and how they can impact your rate:
Your driving record: This is obviously a major factor. A clean driving record will result in a lower premium. Speeding tickets, accidents and other moving violations will push your rates up. Most violations will impact your rates for three to five years while more serious issues, such as a DUI or reckless driving charge can impact your premium for 10 years or more.
Your age: Younger drivers pay significantly more for coverage than older, more experienced drivers. This is because statistics show young inexperienced drivers are much more likely to get in an accident. Insurers typically lower premiums around the age of 25.
Credit score: Statistics show that drivers with lower credit scores are more likely to file a claim so, if your credit score is low, you will pay more for insurance coverage. However, there are a few states that have outlawed the use of a credit score when setting a premium.
Your address: Insurers consider the location of the vehicle as well. Urban drivers will pay more than rural drivers because more accidents and claims happen in cities. Theft rates are also considered as well as weather. If you live in an area that is prone to severe weather you will pay more for coverage.
Your vehicle: The vehicle you drive is a major rating factor. A high-end expensive sports car will cost much more to insure than a minivan. Insurers may have to replace your vehicle if it is destroyed in an accident, so the cost of your vehicle is always considered.