Individual auto insurance rates will vary for each person based upon a number of factors such as the number of miles driven yearly, whether the auto is used for business or pleasure, the age and model of the vehicle, and the driver’s history of convicted traffic offenses. State law often limits the specific rating factors that insurance companies may consider when pricing an auto policy. The rates and rating factors for most types of auto insurance must be filed with the insurance regulatory agency for each state where the insurance is to be sold. In some states and for some types of insurance, the rates must get regulatory approval before they can be used.
Specific factors that go into calculating cost usually include:
- Your driving record and insurance history – Most states require an insurance company to accept an applicant at regular rates unless they fail to meet specific eligibility requirements. However, having traffic and drunk driving convictions, as well as substantially-at-fault (more than 50%) accidents will cause you to pay higher rates. The more tickets and accidents you have, the higher your rates may be. Non-driving matters such as cancellation for nonpayment of your auto premiums may also affect your eligibility.
- Your age, or length of driving experience – While companies are no longer allowed to rate a driver on sex or marital status, your age or length of driving experience still affects the cost of auto insurance. Young drivers will pay more than those considered adults. Different companies set different ages at which drivers are considered adults.
- Where you live – Insurance companies charge based upon the area in which you live. The insurance companies have found that more accidents are likely to occur in some areas than in others, and it costs more to settle claims in some areas.
- Income – When insurance reimburses you for lost wages due to an automobile accident, some companies charge less if a person’s income is below a certain level.
- Vehicle use – Different people use their cars for different purposes. Some people drive to work, and others drive only for pleasure. The less you drive, the less you may be charged for insurance.
- The kind of car – Expensive cars cost more to repair or replace, and so collision and comprehensive insurance costs more. Also, some companies charge extra for sports cars or high-performance models.