Risk And Auto Policy Rates

Marilyn Katz
June 19, 2011

Are you totally confused by car insurance? If so, you are not alone. This is not a good situation, since almost all of us have to have an auto policy in order to comply with the law. If you would like to find better coverage or lower rates, it is very helpful to understand how the top insurers determine how much to charge for each vehicle and driver.

It will not do you much good to try and compare insurance quotes with your neighbor or coworker. He or she may have gotten a good deal from one company or another. That may help you, but it may not. Insurers use a number of individual factors when they decide how much to charge for each vehicle and driver on a policy. The company that gave your friend a good deal may not be the best one for you and your family of drivers.

Insurers look at the vehicles you want to cover. Some are considered more or less risky than others. As you know, insurers set rates based upon the risk they take on when they agree to offer you coverage.

What makes one vehicle or another more expensive to insure? The price of the car is one thing. If a car gets wrecked to much that it will cost less to pay for than repair, it may be called a total loss. In this case, the insurer has to pay the owner the book value of that car. However, they also look at other things, so the actual vehicle's value is not the only consideration.

Insurers also look at the cost and ease of making repairs. In that case, they want to know how expensive it is to get replacement parts. If parts are rare and expensive, the insurer could charge more. If the typical replacements are easy to find and more affordable, the insurer may charge less.

Insurers also look at the safety rating of each vehicle. Cars are all tested to see how well they perform in crashes. If one automobile is noted as a very safe car, it will probably cost less to cover. If a vehicle does not do well on standard safety tests, it may cost a lot more to cover.

Finally, insurers do look at the drivers that are named on the policy. The driving record and age of each driver are considered. A 40 year old driver may fall into a low risk rate class. However, younger and older drivers may fall into a higher risk category. A forty year old will probably get better rates than a 19 or 79 year old.

Insurers are different in the way they determine risk too. It pays to compare different companies to make sure you find the one that can offer you the best deal. Online quote forms can make it very easy to compare insurance rates for all of the cars and drivers in your family.

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