Determination of Car Insurance Rates

I’m sure most of you would have dealt with car insurance before. You call the car insurance companies, give then your details and also that of your car and you’ll get an official quote. You do the process over a few times with different companies and you find the one with the cheapest quote. You look through to make sure the quote is sufficient and if it all fits the bill you pay for it and there you have it. You have car insurance. Most don’t ask how car insurance companies come up with the figure to quote. In this article we will look at how car insurance companies come up with these figures.

The final quote figure that you receive is a sum that has factored in many different elements. All of which are determined by what you write in your “quote request form”. The factors that have the greatest impact on the quote are the type of car being insured, the past history of the people who are going to drive the car and where the car will be garaged.

Let’s first look at how the type of car will affect your car insurance quote. Each type and make of car is categorized under a risk group. Naturally, slow and safe cars which attract the least claims will be categorized under a low risk group which will be rewarded with cheaper rates and quotes. Cars which are fast such as sports cars that attract higher claims will mean that the insurance rates will be higher. Let’s also not forget about the purchase price of the car. Cars that cost more will naturally be more expensive to insure.

The past driving history of the person that the car is insured too also makes a large difference. If you do not have a driving history or have one that is too short to determine your risk factor then the insurance companies will charge you for the extra risk that you pose to them. Car insurance companies will often pull multiple records from the authorities to determine how much of a risk you pose. The common reports that most insurance companies pull would be your criminal record, driving record and sometimes your credit report too. If you manage to keep these reports clean then you can expect that car insurance companies will reward you with a car insurance quote that is more pleasing to the pocket.

The last of the big factors that will determine your insurance rate is where you garage your car and also where you park your car when you go to work. The insurance companies will have rates that correspond to the risk factors of every address in the country. Where you stay and where you work will be given a rating and depending on the risk factor and the claims that insurance companies see from the neighborhood, you will be given a corresponding multiplier.

The rates that people receive for their car insurance quotes also depend heavily on the amount of coverage that you want and also the maximums that apply. This is why we think that comparing car insurance on price alone is a useless exercise. It is vital to compare apples with apples and not just be happy with the cheapest variety. Each car insurance company will give a quote based on its normal maximums and coverage options which differ from company to company.