How to Calculate Car Insurance Rates

How to Calculate Car Insurance Rates

Car insurance is an essential expense, but it shouldn’t be the only factor you consider when shopping for a vehicle. Drivers should factor in all associated costs such as gas, maintenance and repair as well as car insurance when making their financial calculations for purchasing one. An estimate can help ensure a balanced financial picture before making your next vehicle decision; though insurance companies use different formulae to calculate rates there are a few universal factors which influence policy costs across insurers.

While most states mandate liability coverage, drivers have the option of upgrading to full coverage policies with collision and comprehensive protection – usually adding approximately $1,000 annually – which provides added protection in case of accidents or theft. When considering these extra coverages, many take into account their driving history and current auto premium costs; those with no recent accidents or speeding tickets often pay less.

Your vehicle type is also an important consideration. In general, the more costly a vehicle is to replace or repair, the higher its premiums will be because an insurer must cover for the likelihood that a claim will need to be paid out and recover its costs. Vehicles which attract thieves more easily or require costly repairs due to unique construction materials or high-performance engines may result in higher premiums as well.

Other significant considerations are your age, gender, marital status and homeownership status. Insurers often offer discounts for safety features; others have programs to reduce policy costs when you combine both home and auto coverages with one insurer. You can get a rate estimate based on which deductible type you select; this is how much out-of-pocket money must be paid before insurers start paying any claims made against it.

Location is also taken into account; densely populated areas tend to experience more accidents and vandalism, which increases insurance premiums; in contrast, drivers in suburban areas usually pay lower premiums.