Reader’s Question:
I am just confused why this insurance company gave me a very expensive quote for my car insurance policy? How do they determine the car insurance rate?
James
Dallas, TX
You might be confused why you insurance company came up with a hefty $1,200 after computing your car insurance rate. Here are the major factors that led you to that sum:
1. Age
You might be old enough to drive but perhaps you aren’t old enough yet to acquire lesser insurance rates. Many teenagers die of road accidents annually so they are charged higher than drivers 25 and above. The least rates given in relation to age are to drivers between 50 and 65.
2. Marital Status
Single individuals file claims more often than their married counterpart. Hence, they are given higher premiums. Car insurers will change your rates as your status change. Expect your rates to either go down or up if you get divorced or become widowed.
3. Residence
You might be asking why your friend in Maine pays so little while you always end up paying expensive premiums. If you are staying in New Jersey, that’s only natural. New Jersey is the second most expensive place to insure a car—just a little below DC. North Carolina, Indiana, and Maine are the three least expensive, respectively.
People staying in fire, theft, and natural disaster prone areas are given higher rates. Rates can change if you move a few blocks away or even across the street. Make sure you let your insurers know about your every move as they might forfeit your claims.
4. Gender and Occupation
If you are a male doctor, do not wonder why that female teacher across the street pays lower for her insurance. Males are more probable to file claims merely because they drive more frequently than women. In terms of occupation doctors are the second most probable to get involved in accidents, just next to students.
5. Your Car
You might enjoy driving your BMW, but you definitely won’t enjoy paying its premium. Your car type, make, model, and history will also affect your rates. If you are driving a sports car that has get involved in a traffic accident last year, expect your car insurance rate to be higher next time.
