Auto Insurance Quotes – How Does it Work?

You probably receive a letter from a competing auto insurance company every week, asking you to call them for auto insurance quotes. You probably see a TV commercial about auto insurance quotes hourly if you are on the right channel. You have to wonder if you can save some money if you switch.

For some reason, they do not want to put their formulas into an online form that can automatically give you the numbers. Perhaps they just want you to talk to their sales representative who can better persuade you into a commitment. Perhaps, the formula is simply so complicated that one would find it easier to get the auto insurance quotes by phone. So how do they calculate the car insurance quotes?

Calculation of car insurance quotes is a risk return assessment, just like all other businesses. Obviously you will have to pay a higher premium if you are considered riskier. There are numerous factors that are taken into account, such as gender, miles driven per year,etc. We’ll talk about some major factors below.

Age: Statistically, drivers under the age of 25 are more likely to be involved in accidents than older drivers. Drivers in the age group between 50 and 65 have the lowest accident rate.

Marital Status: A married person will pay less than a single person with an identical driving record.

Geography/Neighborhood: people living in areas with little or no traffic are likely to spend less on insurance than those living in congested cities or suburbs because areas with a lot of traffic tend to see more accidents. Some neighborhoods also have a higher rate of vehicle thefts, which results in a higher premium. Cost of living is also higher in those areas.

Traffic Violations/Driving Record: Having an accident or traffic violations on your record (speeding tickets, DWI, reckless driving, etc.) puts you at a higher risk for accidents and implies a higher premium. Some insurance companies will penalize you for your record for as long as five years.

Vehicle Make: Cheaper cars cost less to repair/replace and hence to insure than expensive or luxury ones.

Credit Rating: Some insurance companies consider having a poor, or even no credit history as implication of higher risk and thus, charge you a higher premium. A better credit score might give you better auto insurance quotes.

Occupation: Auto insurance companies have statistically found a correlation between your occupation and risk. For instance, a newspaper delivery person is most likely a higher risk than the personal banker sitting at their desk all day.

Education: Some car insurance companies provide good student discounts.

Years of driving experience: Obviously, more experience will help in car insurance quotes.

Security Systems/Car Alarm/Theft protection devices often result in discounts.

Multiple Vehicles: obviously multiple purchases always get you some discounts.

Evidently, it depends on how badly you want to save on car insurance. It takes a lot of time and energy to shop around. Do you think the money you save is worth the time and energy auto insurance comparison will cost you? This is yet another ROI calculation.