How Are Auto Insurance Quotes Determined?

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Over the past fifteen years, the world has certainly changed. Even just a few years ago, you might have planned to purchase a new car and physically walked into a local branch of an insurance company to get a quote. A few years before that you might have spent a few hours on the phone with various insurance companies trying to find out which company could give you the best rate with the most protection. Those days are long gone, and in their place, we have a much more efficient and consumer friendly system. As insurance companies are able to keep their expenditures down by using automated and computerized systems, insurance costs as coming down, making it easier and more affordable than ever to get great insurance without breaking the bank.

The truth is, there are fairly complicated algorithms that work to keep costs competitive while also mitigating as much risk as possible. Having a bit of information about how these quote systems work can help you to find even better rates. So exactly what do insurance companies look at when they’re creating auto insurance quotes?


Historical Insurance



Driving Record

An individual’s past behaviors are really the only metric that can accurately predict how they will act in the future. After ten years of daily commutes, it’s very unlikely that you’re driving habits and style will change very much. That’s why insurance companies place so much emphasis on your driving record when they price auto insurance quotes. If you have many at-fault accidents on your driving record, the insurance companies providing auto insurance quotes are going to assume that you’ll have more of these accidents in the future, which means that your rates are going to be higher than they would be if you’d never been in an accident. Depending on how many of these accidents you’ve had, these quotes might increase dramatically. If you put yourself in the shoes of an insurance company, you likely understand the kind of risk they’d be taking to offer to pay for damage that’s likely to occur in the future. This is an extremely delicate system of checks and balances, and it’s entirely necessary if these companies are to stay in business.



Age and Gender

While nobody likes to feel compartmentalized, the law of averages is one of the core principles of running a successful insurance company. The insurance company can’t spend time getting to know every single individual they insure, but the next best thing is to understand the demographics that they serve as best as they can. There’s no argument that young drivers get into more accidents, and that’s likely due to the fact that they’re inexperienced, and generally a bit more reckless. Regardless of age, the average male driver is more likely to be in a collision than a female driver is, and for that reason, males are always a bit more expensive to insure.



Marital Status

Interestingly, marital status also plays a role in the price you’ll ultimately get your auto insurance quotes. Married individuals are significantly less likely to be involved in a collision than unmarried individuals are. Perhaps married individuals more often have company with them in their vehicles which causes them to drive more carefully, or maybe these individuals are more inclined to act responsibly because they have a family. In any case, this can also significantly affect the prices of auto insurance quotes you receive. If you’ve recently been married, be sure to report that to your insurance company as this may cause a decrease in your rates.



Historical Insurance Data

The historical insurance data that’s out there is much less commonly known to be a factor in your insurance rates. While these factors are not always a factor in determining your rates, they are sometimes included in the calculation that ultimately determines your rate. One such piece of insurance data is in your coverage history. Drivers who have at one point gone for months without insurance are statistically more likely to get into an accident. Avoiding gaps such as this in your insurance coverage can be helpful to you in the future. In addition, your payment history with your insurance can also affect future rates and auto insurance quotes. Making sure that your payments are on time can thus be helpful to your having the lowest possible insurance rate. If you’ve had trouble with this, it might be a good idea to set up automatic drafts.


Your Car and the Way You Drive it



Your Car and the Way You Drive it

Although not as significant as some of the factors listed above, the make and model of your car will affect your auto insurance quotes and the rate that you ultimately receive. A car that scores very highly in crash tests and other safety measurements will usually receive a lower rate than a similar car without the same high safety scores. How a car is classified by the automaker is also a factor. For example, if the automaker were to qualify their four wheel drive vehicle as an SUV rather than a minivan, it would likely be more expensive to insure. Many automakers use the same base frame for different models that fall into different categories.


Although the vehicles may structurally be very similar, their classification is really a way for the automakers to market the vehicles to different types of drivers. There are automakers, for example that have several variations of the same model. One of these variations can be classified as a high-performance sports car while another could be classified as a four-door sedan. In effect, in addition to the make and model, the way the automaker markets the specific trim of the vehicle can make a significant difference in the insurance rates. Of course, if you have full coverage, the price of the car will in many cases be the single largest factor in determining the rate you pay for the insurance as the insurance will cover its cash value. Regardless of other factors, a car that is worth a few thousand dollars will inevitably be cheaper to insure than one that is worth several hundred thousand dollars.


The way you plan to drive your car can also affect the rate of the auto insurance quotes. If you plan to commute to work in that car every day, you’ll likely see higher auto insurance quotes than if you plan only to drive it on the weekends. All of these factors are important, but many of them are within your control. Responsible driving and behavior, driving experience, and the practicality and cost of the vehicle are the largest factors in determining the rate you pay.