Car Insurance Premiums

How are they determined?

 A car insurance company evaluates your risk of causing a claim to determine what premium to charge. Factors considered are:

You are then assigned to a risk tier: standard, nonstandard, or preferred (some companies may have more or fewer tiers). Virtually all companies will put single males under twenty-five in a higher-risk tier. Some auto insurance companies reject anyone in a high-risk group outright.

Once assigned to a tier, you may be further evaluated by the comapny for risk. Some of the same factors used to place you into a tier are considered again. The insurance company may also consider:

   marital status

  location of the car

  number of cars insured

  other drivers of the vehicles and their records

  applicable discounts (i.e. safety or anti-theft features)

    Each company makes a value judgment about whom they will insure and at what price. Understanding how an insurance company evaluates you, enables you to lower your premiums by improving any rating criteria within your control.  Insurers are increasingly also using credit information to price auto insurance policies.

Research shows that those who effectively manage their credit are also more responsible drivers. So, a good credit record can indirectly lower your premiums.

You can also qualify for a lower premium if you insure several cars with the same company or if you buy several types of policies, such as home, life, and auto or an umbrella policy, from the same insurer. While the type of car you own will influence your premiums; there are other factors however that you can use to lower your premiums:

--You successfully complete a defensive driving course.

--You have a good driving record.

--You use recognized antitheft devices.

--Your car has antilock brakes.

--You do not smoke.

--Your car has passive restraint systems like automatic seat belts and air bags.

--You participate in a car pool.

--You are older than age 50.

--Your use of the car, i.e. business or only personal

--Your annual mileage

-- Mutiyear discoints for paying for more than one full year at a time

--Professional (doctor, lawyer...) discounts

--Military discounts

Some companies establish even more specific conditions, such as getting good grades if you are a high

school or college student. In this case, the insurance company figures that you spend much of your time

studying and therefore have less opportunity to get into an accident.

Be honest, whatever you do. You can get into serious trouble if you provide false information just to save a

few dollars.