Car Blog

As you shop around for the best car insurance quotes, you may start to wonder why so many companies provide such drastic differences in cost, despite the fact that you input the same information each time. The fact of the matter is that insurers use a complicated algorithm to generate the amount of risk you pose as a driver. Since all insurers have a different formula, it’s only natural that their car insurance estimates will be different, too.
Since the risks you pose as a driver are what determine your auto insurance rates, it’s only logical that you can lower them by doing two things. First, you can eliminate or mitigate a few of the risks you pose as a driver. Second, you can find an insurer whose auto insurance rates don’t prioritize your highest risk factors. After all, lower risk equals lower auto insurance rates.
Of course, to do either of these options, you’ve first got to understand what the risk factors are that companies account for in their auto insurance rate calculations.
Demographics play a big role in determining insurance rates. Things like age and sex are well accounted for. Young drivers are in a risk pool, which means that their auto insurance rates are going to be higher — no matter what — until they turn 25. What’s more, insurance companies view male drivers as being riskier than female drivers. If you’re a young male, then there’s not much you can really do to lower your auto insurance rates other than shop around.
Your place of residence and occupation are also big considerations. Auto insurance rates are typically higher for city residents, because data shows that there are more accidents, thefts, and vandalism in cities. What’s more, the closer you are to your place of occupation, the more likely you are to qualify for an insurance discount. This is based on the simple premise that the closer you are to work, the less likely you’ll be to get in an accident. Cheaper insurance is no reason to move, but in the event that you’re already thinking about it, then perhaps consider a low-risk area closer to work.
Believe it or not, your financials are also risk indicators. Statistics show that people with poor credit ratings tend to be higher risk drivers. What’s more, insurers like people who pay their bills on time. To them, timely payments show that responsibility, which translates into lower risk. If you’d like to get better auto insurance rates, then consider improving your fiscal practices.
Things like demographics, geo-locations, and financials are all risk indicators. Keep these important points in mind as you compare insurance quotes. The company that thinks you pose the least risk is the one that will offer the most affordable auto insurance quotes. If you have any questions about auto insurance rates, feel free to ask in the comments.