Factoring Auto Insurance Rates

Although the word “accident,” by definition, means “unintentional,” many accidents are results of negligence by at least one driver. Consequently, they create higher insurance costs for everyone. these higher premiums particularly affect individuals who may be considered at greater risk of having an accident. Here’s a quick look at some of the factors that may affect your automobile insurance costs:

Age Matters: Since younger drivers account for a greater proportion of accidents than older drivers, (Insurance Institute for Highway Safety (IIHS, 2002), premium rates are generally higher for drivers under age 25. However, elderly drivers have the second highest rate of fatal crashes (IIHS, 2002), which contributes to their higher insurance premiums.

Points for Safe Driving. A safe driver rating plan, or some variation of it, rewards drivers with clean driving records and penalizes those with a history of accidents and/or violations. Thus, the driving records of operators listed on your policy directly affect your automobile insurance premiums.

Where You Live. Population density and the number of vehicles on the road are two other important factors that help determine your insurance costs. As people and cars vie for limited space on the road, accidents are more likely to happen. Territories, which can be towns, large cities, countries, or defined geographical subdivisions, are rated based on their losses and “risk” profiles. Premiums are weighted by the record of insurance losses, such as accidents, theft, and vandalism, as well as the history of police enforcement of traffic laws in each given territory.

Your Vehicle. Since the potential for mechanical failure could be reflected in the year, make model, and condition of the car you drive, relevant vehicle information is used to determine rates on particular automobiles. An automobile’s potential usage and exposure to hazardous situations will, in all likelihood, be factored into premium.

-Robert Catalano