What Determines Car Insurance Rates?

Car insurance rates aren’t exactly simple.

Car insurance companies use actuarial data to determine rates. “Actuarial data” is data used by insurance companies that offer predictions as to the chance that you will file a claim. This data includes where you live (some areas cost more per claim than others), the type of car you drive, the likelihood your car will be stolen, and numerous other statistics. It is by assessing these risk factors that insurance companies form their rates.

Demographics play a large part in this calculation. For example, someone who is eighteen years old is far more likely to get into an accident and file a claim than someone who is 55 years old. Those sectors of the population then receive higher insurance premium rates.

In addition, location factors heavily into insurance rates. If you live in an urban area where rates of theft, accidents, and vandalism are higher, then your rates will reflect that. In addition, weather trends can affect insurance rates, especially if inclement weather patterns regularly make for more dangerous driving conditions.

What factors will give me lower rates?

Through statistical data, certain sectors of the population are determined to have the potential for lower-risk claims.

For example, if you:

  • Are over the age of 25
  • Have an older, less expensive vehicle
  • Don’t have moving violations (tickets)
  • Live in a rural area
  • Have a high credit score
  • Are female

By the same token, certain rate factors will weigh more heavily than others. For example, age, gender, and driving records are more important rate determiners than your credit score.

What factors will give me higher rates?

  • Reported claims
  • Past moving violations (tickets)
  • Car accidents on your driving record
  • Under the age of 25
  • Being an urban driver
  • Heavy car usage
  • If you’re a brand-new driver

Your vehicle type and its features play a very important role in the cost of your insurance. 

  • Newer vehicles cost more to insure because they’re worth more
  • Cars with quality anti-theft features will get you a discount
  • Domestically manufactured vehicles are often less expensive to repair so the cost of insurance is often less

What can I do if my rates are too high?

When you’re finding that it’s difficult to pay for your premium, it’s time to find a plan that works for your budget.

Sometimes, you have to overcome your past driving record—car accidents, tickets, or some other reason. Unfortunately, those problems don’t fix themselves quickly. But hang in there, there are options for you. And the future isn’t totally bleak. If you stay continuously insured for one year without a spot on your driving record, as well as make your payments on time, at the end of that year you will be eligible for a discount. 

GEBCO can also help with any penalization incurred as a result of being uninsured in the past or present. Check out the specifics for these services here.

At GEBCO, we work with drivers every day, who have had a string of bad luck. Maybe you received a couple of tickets or had an accident. Or maybe you were late with a payment and your standard insurance company cancelled you. No matter your current driving situation, GEBCO has a plan to help. All drivers, regardless of past records, deserve an insurance plan that works for their budget.

You can get started today with a simple free car insurance quote.

Leave a Comment