How are My Auto Insurance Rates Calculated?

Written By Charlotte Insurance on July 14, 2020. It has 0 comments.

a person calculating the price of auto insurance using a calculator

No one wants to pay a penny more than they have to for their auto insurance. But the factors that determine your premiums can seem confusing and mysterious. While each factor used to calculate your rates is weighted differently, there are some things you can control and some things you can’t.

Here are the various things that determine how much you’ll pay for auto insurance.

Age, Gender, and Marital Status

The details of you as an individual aren’t things you can necessarily control, but they definitely impact your rates.

  • Older drivers tend to get into fewer accidents and so receive lower rates. Younger drivers, especially those 25 and younger will definitely pay more.
  • Women, on average, get into fewer accidents, especially serious accidents and are involved in less DUIs than men. As a result, women tend to pay lower rates for auto insurance.
  • Married couples tend to receive more discounts for bundling their policies and get into fewer accidents on average. Both factors lower auto insurance rates.

What and Where You Drive

The vehicle you drive helps determine your auto insurance rates. Expensive vehicles will have higher premiums because of the additional coverage in case of a total loss. Some vehicles are considered more or less safe than others, based on history of the vehicle and safety features. All of these impact your rates.

But it’s not what you drive that matters, it’s also where you drive. Drivers who only put a few thousand miles on their vehicle a year will pay less than those who drive a lot, whether for long commutes or road trips. The more you drive, the more likely you are to get into an accident which increases your premiums.

Where you live, and therefore park your vehicle, factors into your auto insurance price as well. Urban drivers tend to pay more than drivers who live in small towns or rural areas. Higher rates of vandalism, theft, and accidents occur in areas with more people. But how and where you park your vehicle matters, too. You may pay a little less, even in an urban area, if you have a garage instead of parking on the street.

Your Driving Record

One of the biggest factors in determining your auto insurance price comes down to your past record: driving, claims, and credit. These are the things you have the most control over and indicate whether you’re likely to get into an accident or not.

  • Drivers with better records — few accidents and tickets — will pay less for auto insurance than drivers with lots of accidents and serious violations.
  • If you’ve filed multiple claims in the past, even if the accident wasn’t your fault, that will impact your rate for your current coverage.
  • A poor credit score is often linked with more insurance claims and more instances of insurance fraud. In North Carolina, your credit score won’t get your policy cancelled or deny you service, but it can be used to figure out what (if any) discounts you receive.

Your Auto Insurance

While a lot of personal details may be used to figure out your rate, the auto insurance coverage you choose is a big factor, too.

  • The type of insurance — basic coverage vs “full” coverage — determines your overall rate, before any discounts.
  • A higher deductible lowers your rate while a lower deductible increases it.
  • Previous auto insurance also factors into what you’ll pay for current coverage. Maintaining insurance will save you money in the long-run.
  • Discounts are often available when you bundle your coverage through the same insurance provider. Home insurance or rental insurance combined with auto and life insurance may, overall, cost less than if you buy them separately.

It’s important to buy the most auto insurance coverage you can afford. It only takes one accident to cause real financial stress, if you don’t have enough insurance. Contact Charlotte Insurance today for a free quote on a new policy and to find out what you can do to lower your rates.

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