How Are Your Car Insurance Rates Determined?

Last week we discussed the car insurance marketplace, the types of insurance coverages that are most common and what they really mean. This week we will be taking it a step further and learning how your car insurance rates are determined.

Car insurance companies have a highly analytical department called “actuarial”. These actuaries’ job is to rate every person based on a number of things, some you can control and some that you can’t, to determine what you will be paying for car insurance with their company.

Here’s some common one’s you can’t control your car insurance rates:

  • Age– Typically young drivers (under the age of 26) and senior citizens get charged higher rates right off the bat simply because of their age.
  • Gender– Although insurance companies don’t want to come clean about this one, a study CBS News did showed that men often get charged higher rates than women, because well they are said to drive more aggressively.

Here’s a list of common things you can control that may affect your car insurance rates:

  • Driving Record– Clean records, get cheaper rates. If you’re a safe driver it makes sense to give you a cheaper rate well because you’re less of a risk to insure.
  • Credit Score/Insurance Score– The better your credit score, the cheaper coverage you’re likely to get. It’s been statistically proven that those who pay their bills on time and make more than they spend are less of a driving risk. They actually develop an Insurance Score based on a list of factors and habits that you already have.
  • Amount You Drive– If you only drive 2 miles a day to and from work you’re likely to pay less than someone who is a road warrior who spends hours a day in the car.
  • Geography– Where you live plays a large part in how much your rates are. Often just changing zip codes can increase your rates, sometimes doubling!

As you can see there are things that you can do to improve your chances of paying less for car insurance, but there are still factors that cannot be changed. There have been situations where an individual has submitted for insurance to a company and that company doesn’t want you because of your risk factor, they will actually tell you that other carriers have a lower rate and you should go with them. Now this doesn’t seem so bad at face value, but what it does is show you how deceptive some insurance companies can be rather than just being honest and straight forward.

If you or a loved one has been injured in an accident at the hands of another person, call us today at 704-333-0885. We are here to help with our experienced personal injury attorneys. With office locations in Charlotte, Gastonia, Hickory and Rock Hill, SC we’re just a short drive away.

Written by: Michael Husted, Chief Operating Officer, Campbell & Associates, Attorneys at Law