What Determines Car Insurance Rates

There are many things that can effect your car insurance rates.  You should know what they are before you start shopping so you don't get surprised or make the wrong buying decision.  Many states have different laws as to what you need so you need to start with state requirements before you decide on which company to go with.

While more than half of the states have mandated some form of financial responsibility law pertaining to the operation of a motor vehicle, most boil down to the need to be either self-insured or to carry vehicle insurance. How much is costs depends on many factors as there are no specific rules governing car insurance rates. Location, type and price of the car as well as the driver’s record are some of the key elements in defining car insurance rates.

If the car is housed in a high crime area the price will be higher than that charged for areas with virtually no crime committed against vehicles. Additionally, an expensive car or one on the top of the list of stolen vehicles will have higher car insurance rates than a cheap compact car that no self-respecting car thief would take. The driving record of the insured driver also is high on the list of things that affect car insurance rates as someone with several accidents and claims can be more of a liability to the insurance company and they play the odds, saying that person will probably cost more in the long run than the premiums being charged.

Judging by many statistics, insurance companies also adjust car insurance rates based on the age and sex of the driver as well their successful completion of a driver training course or a defensive driving class.

Non-Driving Related Issues An Affect Car Insurance Rates

When insurance companies look at car insurance rates for an individual, there is some criteria that is not based on their driving habits or their place of residence. Many insurance company’s review a person’s credit history to determine if they are the type that will pay the premiums regularly or will they have to chase them down every month to keep their coverage up to date.

A lapse in coverage can also cause car insurance rates to go up, if the person is required to carry what is termed in many states as an SR-22. This indicates that for some reason the person’s license has been suspended, usually due to lack of insurance coverage, and the insurance company has to keep the state notified of any change in coverage for that person. This additional work will cost the company money, resulting in car insurance rates to obtain and keep coverage, typically for a three-year period.

Some of the obvious factors affecting car insurance rates are speeding tickets, accidents and convictions for driving under the influence. Many insurance companies interpret these convictions as placing the driver on the high risk list and will charge them more for their coverage.