How is My Car Insurance Premium Calculated?

Your car insurance premium might be hard to understand.You provide certain information to the insurance company, but you may not understand how they calculate a car insurance rate for you.If you better understand the factors that influence your rate, you can better evaluate quotes.Here are some of the most important factors affecting your auto insurance premium.

A good driving record will improve your premiums.Some problems on your record are more serious than others.A serious accident or DUI for example, will have a greater impact than an old speeding ticket. Also, if you live in a large city, your premium could be higher, because more traffic increases the chances of an accident.

Your rate is also affected by the number of miles you drive in a year. Drivers who put more miles on their cars will have higher rates.

Expensive cars cost more to replace, so they carry a higher premium. A safe car will cost less to insure than a fast sports car, too, since it’s a safer bet to insure. Your comprehensive insurance covers your car from theft. So, cars that are more often the target of theft are also more expensive to insure.

Deductibles also affect your premium. If you choose a high deductible, premiums are lower. Choose a low deductible, and premiums are higher.

Your choice of auto insurance coverage affects your rate, too.Most states require liability insurance.Liability protects the other driver if you’re at fault in an accident.Other coverage is optional.

Collision covers you when you’re at fault.Damage from theft, vandalism, fire, wind or hail is covered by comprehensive insurance.Medical payments coverage provides money for medical bills for both you and the other party in an accident, if you were at fault. Optional items, like roadside assistance and rental car coverage are also available and will increase premiums.

All of these items are considered when your car insurance rate is calculated.Making changes to these components of your insurance can change your premiums. Understanding them all can help you get the best insurance coverage for you.

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