You are probably wondering why the price of auto insurance can vary from one company to another, or from one coverage to another. There are several factors that determine the price tag. It doesn’t mean that insurance companies mark their prices up or they don’t have any solid pricing. After all, they still need to make profits, and it is one of their main concerns.
The Type of Ride
Do you know that the type of car you have can determine the price of your insurance? If you have a brand new car, it is likely that you have to pay higher. If you choose a brand new sports car when compared to a regular family sedan, naturally, you will be charged more. The newer your car is, the more expensive your policy will be. The more expensive your car is, the more money you have to spend for the insurance.
However, if you think buying an old and a tired looking car will lower your premium, you are hugely mistaken. If the insurance company thinks that your ride is risky (it is brand new and expensive, or it is too old and often breaks down), they will charge you more. If your vehicle is considered safer and not risky, you can enjoy the low – at least standard – policy rate.
Where You Live
The location of your house will also determine the policy rates. If you live in a risky area or neighborhood where the crime rates are quite high, the insurance company will view you as a risky client. Therefore, they will ask you to pay higher rates.
Living in big cities is different from living in small cities. Everything is different, including the crime rate. People who live in small cities or suburbs are considered less risky than those having the address right in the middle of the big cities.
Frequency and Destinations
When you don’t use the ride quite often, the insurance company won’t see you as a risky driver. Since you don’t use the car often, big chances that your possibilities to get involved in the auto crash will be low as well. If you can show the proof that you don’t use the car often and use public transportation more often, for instance, the insurance company may give you discounts.
If you don’t drive too far, it is also possible that you will get a price cut. In fact, when you can show regular driving routine to the company, they may reconsider your rates. If you have regular destinations of home, office, dinner, and then home again on a daily basis (instead of having irregular driving routines with different destinations every day), you may get the price cut.
There are other things that can be determining factors, such as age, marital status, sex, and your driving habit. Male drivers, for instance, are considered riskier than female drivers. A single person is also considered riskier than a married person. If you are a single male under 20 years old, it is likely that your car insurance rate will be high.