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\ABS\Auto Blog Samurai\data\insurance\wwwallstatecom\many+factors+may+influence+auto+insurance+premiums_16000325_800709737_0_0_7066834_300.jpg "Many factors may influence auto insurance premiums.")
As anyone who has shopped around for auto insurance knows, there's wide variation in how auto insurance plans are priced. Not only do prices vary among providers, they're often different from person to person.
The main reason why this is the case is because several factors are taken into consideration by insurers when assessing a policyholder's premiums. As the Insurance Information Institute* (III) indicates, prices are determined after analyzing several different criteria.
Driving record
One of the main one criteria considered is the policyholder's driving record. As a general rule, the cleaner the record is, the more affordable the plan will be. That's because a history of traffic violations and accidents is an indication to the insurer that the driver may be involved in another accident. That increased risk generally leads to higher premiums, III notes.
Frequency of vehicle use
Another factor is how often the car is used, III indicates. Naturally, if someone spends a great portion of their day behind the wheel, it increases the risk they will be involved in an accident. Thus, driving less often not only saves motorists on gas, but it also generally saves them on premiums.
Where the car will be driven
Insurers also take where the policyholder lives under advisement. III points out that some parts of the country, particularly urban localities, have higher rates of crime than others. This increased risk of vandalism may translate into higher costs.
The insured's age
The policyholder’s age also plays a role. While there are always exceptions, statistics show that younger drivers tend to be in more accidents than drivers who are older. As a result, individuals 25 and under are often charged a bit more, according to III.
The type of car
Just as the make and model of a vehicle affects its sticker price, auto insurance providers also weigh these factors. The size of the engine, cost of repairs and the vehicle's safety record all vary from vehicle to vehicle, leading to disparities in premium prices, III indicates.
Amount of coverage
The extent of an auto insurance plan also influences premiums. III notes that just about every state requires motorists to at least have liability insurance , but some people choose to purchase additional coverage, especially if they have purchased an expensive vehicle. That's because liability insurance is limited in what it provides. For instance, liability protection does not cover a stolen vehicle; replacing the vehicle will have to be paid for out-of-pocket. Comprehensive coverage can help policyholders recover their losses if their vehicle is stolen.
Consumers may want to consult with their insurance agent about additional factors that are considered in the rate assessment process and what they can do to help lower their monthly premiums.
*according to the Insurance Information Institute on Feb. 22, 2012
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