Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Oct 18, 2020

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Here's what you need to know...

  • It’s illegal to drive without your state’s mandatory car insurance coverage
  • You can save a lot of money by bundling your insurance needs with the same carrier
  • Comprehensive policies offer more coverage than basic liability

Auto insurance is required in in every state. As one of the few products that the state mandates that you carry, it is important that you know what you are buying.

Buying a comprehensive policy that offers you broad coverage limits is important, but you also want to stick within budget when you buy a product that you really never want to be in a situation where you need to use it.

If you are looking to buy a policy for the first time or you are planning to switch insurers, you need to understand rates, how they are calculated, and how your quotes can change when the policy is issued.

Read this detailed guide to car insurance quotes and learn how to get the lowest rates without putting yourself at-risk just to save a few dollars.

Use the FREE search tool above to start comparing car insurance quotes instantly! Enter your zip code above to get started!

Table of Contents

How are car insurance rates determined by leading insurers?

Insurance is a game of risk. In this marketplace, companies who provide insurance to consumers do their homework before they extend an offer for coverage.

As they do their homework, they will gather data and then use this data to crunch the numbers and figure out how likely you are to experience a covered loss that results in a paid claim.

In the auto insurance marketplace, applicants who are determined to be riskier drivers will pay more for liability coverage, physical damage coverage, and other supplemental coverage options.

You may be wondering how insurance companies can determine who is more likely to file a claim.

Simply put, insurance companies use a long list of rating factors that have been established by actuaries as important.

These factors have been proven to have an effect on claims and how costly they can be.

Here is a breakdown of the factors that matter and why they are so important:

— Driving Record of Each Listed Driver

It is not just your driving record that matters, but the record of every driver listed on the policy. You might have a blemish-free record but the fact that your husband does not has an effect on the rates.

Some people wonder why a moving violation really impacts premiums when it does not cost the insurer any money.

The answer to this is because people with one or more violations in a certain span of time are higher risks than those who obey traffic laws.

— Age and Gender

Age and gender may be separate factors, but the two tie together. Females are statistically the better drivers. Men drive more often, make more dangerous moves and have more accidents.

Young men are the riskiest between the ages of 16 and 25.

At that time, the rates will drop because men 25 to 35 are less of a risk. As you can see, there are factors that can affect your rates that you have no control over.

— Vehicle Type of Safety Record

Your car can dramatically affect your rates. If you are a safe driver, you are in a low-rated age range and you do not know why your premiums are so high, it could be your car.

The style, vehicle weight, size, structural design, safety features and crashworthiness of a car will affect its rates.

Some believe that it is purely the cost of the car, but that is not true. Expensive vehicles with good safety records may have lower premiums than average priced cars that do not perform well on crash tests.

— Usage and Mileage

How often do you drive? Where do you drive to regularly? The answers that you give to these generic application questions do matter.

People who drive long distances to work or to school have a higher chance of getting into a crash. People who drive a commute instead of just driving for pleasure are more likely to have a loss.

If you drive less than the average mileage in your state and you do not commute, you will be in a lower rate bracket.

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How can you keep your rates down?

Accidents happen about 100,000 times per day in the United States alone. Considering the fact that your chances of getting into an accident at some point in time in your life, having a policy that protects you is important.

The last thing you want to do is remove collision coverage from your policy just to get into an accident that costs you $10,000 out-of-pocket the next month.

Saving that $20 to $50 per month may look good at the time, but as soon as you need to file a claim, you will be left asking yourself why you made such a reckless decision.

The best way to save money off of your premiums is to take advantage of discounts and rating factors that benefit you.

Now that you know some of the most important rating factors, you are on your way to getting the best possible deal on your coverage. Here are some valuable tips on saving money off of your policy:

— Multi-Car and Multi-Policy Discounts

If there is more than one car in your household, insure each car with the same company.

Doing this will qualify you for a multi-car discount or a bulk rate that could save you 30 percent or more.

It can also be beneficial to insure your home, apartment, condo, motorcycle, recreational vehicle, or life with the same provider.

If the provider offers more than one line of insurance, you can qualify for a multi-line discount that saves you money on more than one policy.

— Take Voluntary Driving Courses

If you get a ticket, taking traffic school can make the points disappear so that your insurer cannot charge you. If you are a young driver, defensive driving or driver safety training can qualify you for a discount.

If you are over 55, a mature driver course will save you money for 36 months. You will even learn some useful information.

— Buy a Safe Car

If you are car shopping, get quotes on your car before you decide that you need a sports car.

A vehicle’s safety record is very important when you want low rates.

Heavy vehicles, vehicles without safety features, and those frequently involved in accidents will cost you more to insure.

— Carpool or Take Public Transportation

If you have a long commute, you can reduce your annual mileage and save money off of your insurance by carpooling or taking the transit.

Consider how many miles you will cut out each year and you can reduce maintenance costs, gas costs, and insurance costs. Not only do you save money, but you are also saving the environment.

— Raise Your Deductibles

Deductibles are the amount of money that you must pay towards a physical damage loss before your coverage will pay.

Most of the time, the collision deductible is larger than the comprehensive deductible.

If you want to keep the policy costs down but you need physical damage protection, you can raise your deductibles from $250 to $500 or $1000.

Just be sure you have enough to pay the deductible if you ever need to file a claim by creating an emergency fund with the money that you are saving.

— Exclude High-Risk Drivers

If someone in your house has a bad record but has their own insurance, exclude them from your policy. Just be sure that they do not drive your car because they will not be covered.

When you are getting quotes, be sure that you provide accurate information. One wrong answer could result in a misquote and a policy that costs you more than you expect.

If you want quick, accurate quotes, use our online rate comparison tool below! Enter your zip code to get started for FREE!

References:

  1. http://www.iii.org/article/what-determines-price-my-auto-insurance-policy
  2. http://www.insureuonline.org/consumer_auto_ten_tips.htm
  3. http://www.iii.org/article/shopping-for-a-safe-car
  4. http://www.kiplinger.com/article/insurance/T004-C000-S001-smart-shopper-s-guide-to-auto-insurance.html
  5. http://www.investopedia.com/articles/pf/08/car-insurance-costs.asp
  6. https://www.statefarm.com/insurance/auto/discounts
  7. https://www.nationwide.com/defensive-driving-discount.jsp
  8. https://www.geico.com/
  9. https://www.thebalance.com/how-to-choose-your-auto-insurance-deductible-527483
  10. https://www.progressive.com/