How are my auto insurance rates determined ?

Your car insurance rates are normally determined by two main processes with a number of factors influencing the out come of each.

The first process is known as insurance underwriting, which is basically the insurance company deciding if they want to sell you an insurance policy and if so what rating or category of motorist risk are they going to place you in. Primary factors considered in most underwriting processes are you and your lifestyle along with your driving habits.

Examples of the specifics the car insurance company will be looking into include but are not limited to:

Driving records - your driving record and the driving records of others you want named on your auto insurance policy. Moving violations and history of automobile accidents will negatively impact your risk category.
Location - Where you auto will be stored or garaged, can have either a positive or negative impact on your car insurance risk category. Auto insurance underwriters have access to massive amounts of information and can easily find the claims information they need about particular cities and towns and in many cases right down to the neighborhood or a street. Zip codes alone often provide the location information used.
Gender - Statistics show men are involved in more car accidents than women.
Age - Auto insurance companies have vast amounts of age related data on car accidents and are able to target specific age groups for higher car insurance rates. This data combined with the gender data reveals no surprise in that young men have the highest car insurance costs. Also teenagers car accident statistics are almost overwhelming.
Marriage Status - Auto accident data reveals that married auto policy holders submit fewer auto accident claims then single auto policy holders.
Vehicle Use - The number of miles a motor vehicle is driven has a significant impact on car insurance rates and this formula is really pretty straight forward, the more miles driven the higher the cost of auto insurance.
Make and Model of the a vehicle - The type of car you drive does have an impact on your cost of insurance. It is fairly clear to most that the more expensive the car the higher the cost of collision coverage do to the higher cost of repair. But here is a kicker that many never suspect, the auto insurance companies have data on the number of claims made by make and model of car, and that has a high number of claims for a car type results in higher car insurance costs for the owner.
Demographics of Licensed Drivers in Your Household- it will be necessary to provide a listing of all licensed drivers in your household, and although it is unlawful in some states for insurance companies to include learner's permit holders when figuring your rates, they do want to know the ages of prospective drivers and will notify about rate adjustments as younger members of the household become licensed drivers.

Once these factors have been determined the underwriter will place you in a general risk category which will determine the tables or rate schedule used to compute your rates for the specifics of the policy they will offer. There are three general rating/risk categories into which most drivers fall.

Preferred - This risk category is for drivers that the car insurance company considers to be an excellent risk, meaning that generally speaking they are given the lowest rates.
Standard - This category is the one into which most drivers are placed, that of moderate risk, with moderate rates
Non-standard - This category is consider high risk and drivers that are place into this category are frequently not voluntarily offered car insurance by the auto insurance companies, depending on companies over all exposure at the time the under writing request is received. Many find themselves in this category simply because of the nature of their daily commute back and forth to work each day. As expected this category is assigned the highest rates.

Some of the aspects of auto insurance that tend to be "overlooked" by many insurance agents and brokers is the opportunity for car insurance discounts based on specific underwriting factors. In other words things, the auto insurance companies don't want you to know.

Age - some states offer a discount in auto insurance costs to drivers over the age of 55. Participation in a driver's education program for adults may be required.

The number of motor vehicles insured - Many insurance companies offer a discount to those insuring more than one vehicle. These auto insurance discounts are not only extended because they want all of your business, but car insurance underwriting data shows show that individuals and families insuring multiple vehicles have a lower number of insurance claims.

Driver's Ed - Discounts for driver education discounts are normally made available newly licensed drivers. This is such an important underwriting factor that you will asked about this on your car insurance application.

Good Student Discount - Car insurance data has revealed that students who a earn a B average or better tend to be safer drivers. Be sure to ask your car insurance company about this secret little money saver.

Safety Devices - When an automobile is equipped with certain safety devices that are known to help prevent accidents and/or lessen the severity of injury many insurance companies apply a small discount. Some of the identified safety features include air bags, automatic seat belts, and anti-lock brakes. This is another of those quiet little tidbits you'll need to ask for.

Burglar Alarms or Antitheft Devices - Alarms, devices or other rated systems for deterring auto theft or vandalism can result in significant savings in your comprehensive coverage . Most companies offer these discounts especially on makes and models that are most susceptible to theft. These devices are such money savers for the auto insurers that you will asked about them on your car insurance application.

Low Mileage Discount - It is assumed by most insurance companies the you will drive a certain number of miles each year, and although most all insurance companies will ask if you drive more than that, that don't always ask if you drive less than that. The fewer miles driven, the less accident risk. Be sure to find out if you qualify for a low mileage discount as these savings can be quite attractive.
Good Driver - The cleaner your driving record the better. The good driver discount is another serious money saver, but again is one you have to ask about. If you have a clean record for 5 or more years it could be well worth your while to inquire.

Insurance Package Discounts - If you have homeowner's, health, apartment or any other type of insurance you may want to ask your agent or broker if there is anyway to bundle your insurance package for a lower over all cost.

Dividends - Some insurers, offer dividends to policyholders if the sale of auto insurance for the past year has been profitable. It is something worth asking about, but not always available nor always the most attractive plan.