7 Ways That Automobile Insurance Premiums Are Figured

Everyone is looking to save a buck in this economy, so why not save on your car insurance? In a moment I will explain to you how your premiums are calculated. But first...

Insurance rates, Einstein and The Theory of Relativity.

Did you know that it took Almost 200 years from Sir Isaac Newton in 1717 until Albert Einstein in 1905 finally came up with his his infamous, formula, E=mc2. Well what in the world does, auto insurance have to do with the theory of relativity? Basically this, you don't need to be an Einstein to figure how your auto insurance premiums are calculated.

In fact, here are 11 ways an Insurance company figures out how much your premium will be. Some of these you may not be able to do a single thing about.However, there are many you can use to your advantage. When you are done feel free to call an insurance agency so they can answer your questions.

1- Age: How old is the person driving? Statistically, young drivers have less time on the road than others and so it will cost a little more for right now. The good news is that is only for a few years, because when you turn 25 your rates will drop significantly. If a driver is less than 18 years old they are too young to get their own policy. This means they will need to be listed under someone elses insurance plan. Once they turn 18 they can get insurance under their own name.

2- Sex: Are they male or female? Unfortunately male drivers will pay more because the statistics show they are involved in more accidents. Sorry about the bad news guys!

3- Next comes the Vehicle's information including year, make and model: I told you that you don't need to be an Einstein. ts obvious that a new car will cost more to insure than an old car. On the other hand, a more luxurious car will cost more than a less expensive one, and a performance car will cost more than a sedan. Believe it or not, imported cars cost more to insure than American cars! If you want to save the most money you can on insurance, try and pick a Domestic, 4 cylinder, 4 door sedan or minivan. If you want a 2 door red roadster then to be prepared to pay a lot more for insurance!

4- Address: Did you know that your home address will affect your rates? Think about it for a moment, if you live in a zip code that statistically has more accidents, thefts and claims then prepare to pay a little more.

5- How many miles do you drive a year? It only makes sense that the more you drive it the more chance of having a fender bender. The opposite is also correct, you will pay less if you do not drive it as often.

6- Deductibles: The higher a deductible you select, the lower your rates will be. So if you select a $250 deductible, then be ready to pay more than if you would have chosen a $1,000.00 deductable. This isn't rocket science folks, so if you are a good driver and have confidence in your ability to drive safely then go ahead and pick as high a deductible as you can afford.

7- Driving record: As discussed previously, teenage drivers will pay more for coverage because they have less experience driving. However, there are additional things that will cause your monthly bill to go higher. Any tickets lately?. Believe it or not, the parents driving record will also contribute to how much the premiums go up. If the parents have tickets or accidents the rates will be higher than if they had a safer driving record.

Remember that your driving habits are one of the biggest contributors to the cost of your monthly premiums. Make it a habit to be a safe and defensive driver.

In conclusion, shop around for the lowest rates. Every insurance company will have their own automobile insurance rate schedule. So it make sense to be a smart consumer and check your pricing. Just remember to compare apples to apples.

I've shared 7 of the 11 points here, go to our blog to read the rest of this article.