Insights + Resources

What Determines Car Insurance Rates?

Jun 13, 2022

Car Insurance Paper Pencin
Driver history is just one factor; there are many others.

Your car insurance premium is based on more than your driving history. The amount you pay for auto insurance is determined by a complicated algorithm that takes many factors into consideration. Your driving history is just one variable used to calculate your rate. Read on to learn more about what auto insurance carriers look at when they determine your premium.

Age is a key factor.

Younger drivers are considered the riskiest to insure due to their lack of experience behind the wheel. Most insurance carriers consider a “young driver” to be someone under age 25. Drivers older than 25 typically pose less risk, so your car insurance premiums may drop as you get older.

Your location makes a difference.

Your location is one of the biggest factors in determining your car insurance premium. Insurance carriers use data from more than just your state and county; they often use information from your specific zip code. Insurance providers don’t just look at whether you live in an urban or rural area, but also at the motor vehicle theft and crime rate statistics where you live and park your vehicle.1

The car you drive may also factor into the calculation. There is a direct correlation between the cost of the vehicle you drive and your car insurance rates. If your car were damaged or totaled in an accident, it would cost the insurance company more to replace it. But other factors, like if the make and model of your car is a frequent target of thieves or prone to passenger damage, will also cost more. Vehicles with a high safety rating, lots of safety features, and theft-deterrent systems, however, may help offset these costs and lower your rate.2

Married couples typically save more on their premiums.

Being married can be a plus when it comes to auto insurance rates. Some insurers think that married people lead less-risky lives. Married couples save a national average of 6% on car insurance, but some states, it may save them as much as 12.7%.1,2

Primary vehicle use.

The 2020 State of Auto Insurance Report, published on Zebra.com, says that the typical insured driver has a personal use policy, which means that their car is used to commute to work and run personal errands. But if you’re using your vehicle for business and to drive between clients, you may want to consider a business auto insurance policy to make sure you have adequate coverage.3

Insurance carriers run these variables through their own refined algorithms. Car insurance companies have different ways of calculating the cost of insurance, which is why rates may vary so much from carrier to carrier. You may be able to save significantly by comparing auto policies and shopping around.

Have any other questions? Ask your dedicated team member at Epic Capital today!

Tags: , , ,

More Insights

Feb 21, 2024

You don’t want to pay more in federal income tax than you have to. With that in mind, here are five things to consider when it comes to keeping more of your income.

Feb 16, 2024

Investors are routinely warned about allowing emotion to influence their decisions. However, they are less routinely cautioned about their preconceptions and biases that may color their financial choices. In a battle between the facts & biases, our biases may win. If we acknowledge this tendency, we may be able to avoid some unexamined choices when … Continue reading “Do Our Emotion or Biases Affect Our Financial Choice”

Feb 14, 2024

Financial generalizations are as old as time. Some have been around for decades, while others have only recently joined their ranks. Let’s examine a few common retirement assumptions. Retirement means I can stop investing. In the past, retirement was viewed as an “end” in many ways. These days though, retirement is often seen as an opportunity … Continue reading “Debunking Common Retirement Assumptions”

Feb 12, 2024

Byron Wien recently passed away. He was a true Wall Street icon. I had the good fortune of meeting Mr. Wien once when I was seated behind him at an investment conference during the depths of the Great Financial Crisis (GFC). Mr. Wien was probably best known for his annual top ten list of surprises … Continue reading “How Could the Markets Surprise Us in 2024?”

Feb 9, 2024

Stocks are off to a solid start in 2024. January gains are particularly enjoyable because of the old adage from the Stock Trader’s Almanac, “As goes January, so goes the year.” Nearly 75 years of historical data shows that when the S&P 500 has risen in January, the average gain for the remainder of the … Continue reading “Market Update – Solid Start to 2024”

Insights + Resources >