How Do Car Insurance Companies Calculate My Policy Premium?

Car insurance rates seem to just keep going up, and many people are confused about how their vehicle insurance rates and premiums are calculated. This is because the auto insurance industry keeps this a well guarded secret, so this information is not freely available. There are many factors that are included to calculate your car insurance premiums, and knowing what these factors are can help you find and keep cheap car insurance without sacrificing quality or customer service. Age is a big factor in the auto insurance premiums you pay, and drivers under twenty five years old or those that are over fifty or sixty years old are charged more in vehicle insurance premiums, because the risks are higher that these drivers will be involved in an accident or other claim. Sex also has a big effect on your car insurance rates, and males will generally be considered a higher risk than females.

The car insurance companies looks at all the risk factors that are included in the driver profile, and then they assess the risks involved in writing a vehicle insurance policy for that driver. Tiers are used by most insurance companies, according to the relevant risk factors involved with that driver. Car insurance companies may have three to fifteen tiers, depending on how their system is set up, and a driver is assigned to the tier that accurately reflects the risks involved in insuring the driver.

The more tiers an auto insurance provider has, the lower your car insurance premiums may be. This is because the tiers are more discriminating, and more individual risks can be considered without classifying your car insurance company high risk. If you are considered a high risk driver, your auto insurance premiums will be the highest available. If two or more tickets, accidents, or injuries occur in a specific time period, your auto insurance carrier may move you to a higher risk tier, and this will raise your car insurance rates. Certain violations, such as a DUI or OUIL, may automatically push you up to high risk insurance instantly, and in certain cases your auto insurance company may cancel your car insurance and refuse to cover you because of the risks involved.

Because there are so many different variables involved, car insurance rates will vary from one auto insurance carrier to the next. Just a different number of tiers between companies will affect your vehicle insurance costs, and you can use this to your advantage. Auto insurance quotes will allow you to receive all the information you need to choose your car insurance, from many different companies. Because these costs can vary widely, you will be able to find cheap auto insurance by comparing car insurance quotes, so you don't pay more than you have to. Auto insurance companies set your premiums based on all the facts, but each company decides how much weight each factor will carry, and most of them use your credit score as one deciding factor. Compare car insurance quotes and save hundreds or more every year.