Important Things to Consider about Car Insurance Companies

Car Insurance Companies : What You Must Know

Most individuals have no idea how car insurance companies calculate the numbers when setting their rates. It is often a complicated process that is designed as an effort to maximize profits while still having enough money to pay out customer claims. As a result, they are continuously adjusting all of the potential risk calculations necessary to stay competitive in the market, while offering rewards to good drivers, and penalizing those that offer higher risk.

At its most rudimentary level, car insurance companies use a variety of components to determine risk in an individual, when attempting to find the ideal rate. Therefore, the ability to lower your potential of risk, the more likelihood you will receive a lower rate by car insurance companies looking to take you on as a customer through a reward system. There are five crucial components to minimizing the potential of risk, at least in the eyes of insurance companies.

Car Insurance Companies

These include your:

Driving Record – Every potential car insurance company that is offering you a low rate has determine exactly how much they will charge based on your driving record. They will have a specific standard they use for insurability, and when evaluating the potential of your risk. Your driving record will have a direct impact on exactly how much you will pay to all available car insurance companies.

Credit History – Many drivers are unaware that car insurance companies now look at the driving records and credit histories of every potential policyholder, before issuing coverage. The higher the score that the individual has on their credit rating, the less likely they will file a claim, which will reflect greatly in lowering monthly premiums.

Vehicle – The type of vehicle you drive plays a key component to determine exactly how much you will be charged for your insurance.  A racy sporting car, a high performance flashy vehicle, or large SUV will surely cost more to insure than an older van, or compact car. People tend to drive more reckless when they have sportier looking vehicles than those that drive sedans or even older station wagons. In addition, a high-end sports car will likely draw the attention of thieves and vandals, increasing the risks involved with car insurance companies.

Demographics – It is not hard to imagine that a teenager is in a specific demographic group that is likely to have more potential for an accident, especially if he or she just received their license. Safe drivers, and those that have not filed a claim for years, are likely to receive a substantial discount when receiving quotes from car insurance companies eager for their business.

Unforeseen Factors – If you park your car in the garage, work from home, or are retired, you are likely not going to be affected by many of the unforeseen factors that long-distance drivers tackle every day. As a result, you likely have lower rates from insurance companies as a reward.

Therefore, it is imperative to obtain at least five quotes from insurance companies to ensure that you are receiving the best rate before making a purchase, or switching carriers.

Posted under Car Insurance Companies

This post was written by admin on January 13, 2014


  1. June 11, 2013 4:37 pm

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