Insurance rates are based on the likelihood that accidents or claims will occur. Insurers use a variety of factors to assess this risk, such as coverage limits, deductibles, and even creditworthiness, when setting rates.
When determining auto insurance coverage, insurers consider several factors, including the type of vehicle, the theft rate, and safety features. They also take into account their drivers’ driving history, as well as their claims histories.
Rates are based on several factors
The cost of insurance can vary depending on many factors, and the coverage offered by insurers may differ. Your driving history is also taken into consideration (accidents, traffic tickets and other factors will raise your insurance rate), as well as the type of vehicle (vans, sports cars and luxury vehicles are more expensive to insure). The make and model of the car are also important factors: Insurers evaluate whether a vehicle is safe to drive, and if its ability to protect occupants in an accident exceeds potential damage.
As well, age and gender have an impact on rates. Men in their teens pay higher rates than women, but the rate begins to even out after this point. Moreover, the marital status of a driver can influence rates. Many insurers think married drivers are responsible.
Location also affects your rate, since certain areas have a higher theft rate or accident rate than others. We calculate your rates based on factors such as zip code, home address and neighborhood.
High-mileage drivers pay more
When calculating car insurance rates, insurers consider the annual mileage of drivers as one factor. Insurance companies may charge more for drivers who drive more than 12,000 miles per year due to the increased risk of accidents.
Rates are also affected by the type of vehicle you drive. Due to the cost of maintaining and replacing these vehicles, as well as due to their higher MSRPs and insurance costs, sports cars and SUVs are more likely to have higher insurance rates.
It is wise to compare rates and shop around to get the best deal. In most states, liability coverage is mandatory. However, you may want to consider other types of insurance, such as comprehensive and collision, which provide protection against an accident that you caused, hailstones hitting it, or flooding.
Insuring luxury vehicles is more expensive
Due to the higher repair costs, and risk of theft, luxury vehicles are more expensive to insure. Comparing quotes and shopping around can help you lower the insurance cost for these cars. A good driving record and a credit history that is impeccable can also help keep insurance rates low.
ValuePenguin analyzed the car insurance rates of 12 luxury cars to determine their annual insurance cost. They represent the averages of eight insurers, and full coverage policies. See table for a breakdown of premiums as well as annual costs.
The lowest premiums are offered by Nationwide for BMW 7 Series drivers at just under $1,000. Mercedes AMG owners pay an average of $2,287 in annual premiums, but this can vary depending on the company and region.
Good credit drivers pay less
In general, drivers who have excellent credit scores pay less for auto insurance than those with lower scores. However, credit is not the main factor when it comes to determining whether or how much coverage to buy.
State regulations, driving record and demographics are all factors. If you live in a high-crime area or have been charged with several traffic violations, your insurance premiums will be higher.
Bankrate’s study revealed that New Yorkers pay the most for full coverage auto insurance, $2388 annually to be precise. Iowans spend the least at $664 per year. Your rate could be very different from the national average due to it being so individual. The best way to know is to use our free comparison tool, which allows you to quickly compare personalized quotes from leading providers.
Drivers in areas with high traffic pay more
The insurance companies tend to raise premiums in areas with high traffic because the number of vehicles increases the risk of accidents and vehicle damage. They also increase the cost for labor and parts. Many companies use statistics about claims, thefts and accidents to determine your rate.
Age, gender and marital situation are also factors that affect your premium. The premiums for younger drivers are higher due to their less experience on the road and greater risk of being in an accident.
Certain models are more expensive to insure. Insurance companies consider MSRP, safety features, and repair costs in determining the premiums they charge for different makes and models. Some insurers may also consider whether you use the car primarily for business or for pleasure. Both factors can impact on how much coverage is included in your policy.
