The Determinants To Car Insurance Rates Author:    Posted under: Auto InsuranceAuto Insurance RatesAuto Insurance Ratings and Factors

There are many factors that determine the cost of car insurance premiums. Some of these factors may even come as a surprise to some. It really pays to read and research about these things first in order to understand where you money is going.

From what I gather in my own reading, the following are usually what constitutes car insurance rates/premiums:

Geography/ZIP Code

Many do not understand the reason why where they live affect their insurance premium. Those living in cities or urban areas pay more on their car insurance premiums. Why is this so? More people live in cities and urban area. The more people, the greater traffic there is and greater collision or accident occurring. There is also greater risk of car theft in the urban areas. This explains why insurance premium in smaller towns or less populated areas are relatively lower.

Age and Gender

First time drivers and those who are under 27 years old gets to pay higher premium than the others. Male drivers (in the category of 1st time drivers) pay more insurance premium.

Driving History

The insurance amount to be paid also depends on the individual and his driving history. If the individual had an accident before or have countless moving violations (speeding, reckless driving, DWI), makes you a high-risk driver and a candidate for frequent accident claims.

Type of Car

The type of car you drive or own also determines the extent of your car insurance premium. Needless to say, the more expensive or high-end you car, the higher the premium you will have to pay.

Credit Rating

Insurers want to make sure that their client will be able to pay for the car insurance premium. Poor credit record will most likely turn-off the insurer. If you don’t have any credit record at all falls in the same category as well. These factors suggest that you are of higher risk and will be charged with higher insurance premium as well.


What type of job you do is also a determinant in car insurance rate. If you spend most of your working hours on the road, then it means you use your car more often and accidents have a higher percentage of happening. Whereas, if you sit on your desk throughout the day it means that you spend less time in your car.

The rates of car insurance really depend on the individual seeking to be insured. There is no one formula or template that the insurance providers use.

Make sure that you sit down with your insurance agent or representative from the insurance provider to discuss and negotiate your car insurance coverage.


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