How are Auto Insurance Premiums Determined?
Auto insurance premiums are what an insurance company charges for insurance coverage. When you pay a premium, you are basically paying your monthly bill, which the insurance company determines based on multiple factors. For example, your premium could be determined by:
-Your age. Younger drivers have less experience and are more likely to get into an accident. Thats why its important to get your drivers license as soon as possible, so that you can benefit from more years on the road. In addition, younger drivers are statistically more likely to speed and drive aggressively, which is a big factor in accidents.
-Where you live. If you live in a busy area like Los Angeles, you will end up paying more for your insurance than someone who lives in the plains of Oklahoma, or the backroads of Kentucky. There are simply more accidents in these areas because there are more people driving. Auto theft is also more common in bigger cities, driving local premiums up.
-Your driving record. This is a critical factor in the way an insurance company determines your auto insurance premiums. If you were involved in multiple accidents in your career as a driver, you will pay more to be insured on a monthly basis because the insurance company sees that youre going to be a high maintenance policy holder. Conversely, if you have a pristine driving record with no accidents, you will be rewarded with a lower monthly auto insurance premium.
-Costs. Health care costs are a factor in how the insurance company determines your auto insurance premiums too. The more health care costs, the more the insurance company will have to pay should you be responsible for another drivers medical expenses. Auto repair cost are also a factor if the general cost of repairing a car starts to rise it will more than likely show up in your monthly auto insurance premium.