How Are My Auto Insurance Rates Decided?

There are several deciding factors that an auto insurance company uses to determine your auto insurance rates. These are the most important indicators of your potential risk to an auto insurance company. The lower the risk you are, the lower your auto insurance rates.

Your Car

• Do you drive a high-powered sports car or luxury car? Then be prepared for the additional costs of insuring thee types of vehicles. The temptation to speed in a sports car leads to many accidents, so your auto insurance company will charge you more to insure a sports car than say a minivan. Most high-end sports cars and luxury vehicles are more expensive to repair and replace, so that will affect your auto insurance premiums as well. The safety features and crash rating of your car are very important to your auto insurance company. Auto insurance companies are also looking to see if your car make and model is frequently stolen. Those who drive SUV's can pay as much as 20 percent more in auto insurance premiums. SUV's tend to have less stellar safety performance than most cars, and because of their size, they cause more damage if they are involved in an accident.

Your Driving Record

• Your driving record influences your auto insurance premiums more than any other factor. If you have at-fault auto accidents, frequent traffic violations and all within the last three years, your auto insurance rates will reflect this in the form of higher auto insurance premiums.

Your Credit Report

• Some companies use credit reports as an indicator of risks. Some studies show that those with higher credit scores file less auto insurance claims, but this issue is considered controversial in many states.

Your Claims History

• If you file a lot of auto insurance claims, whether you are at fault or not, it could affect your future auto insurance rates negatively, unfortunately. Your insurance score is a composite number based on your auto insurance claims history and credit report. Keep your claims limited to situations you cannot handle on your own.