Call Us Toll Free: 1-855-430-7753

Base car insurance rates

Two companies can offer you rates that differ by hundreds or even thousands of dollars, even though they are looking at the same information.

Just how are your car insurance rates established? 

Insurance companies make educated guesses about how likely you are to file a claim by poring over data, then determining a base rate that applies to broad categories of drivers, such as men under the age of 25 living in Sacramento, Calif.  They then look at the individual factors that change the likelihood of a claim, assigning a risk factor to each.

The algorithm each company creates must be filed with and approved by your state’s insurance regulator.

While auto insurance companies tend to use the same basic criteria, they weigh the various risk factors differently.  One insurance company might have had fewer claims for theft for your particular car, for example, or more fraudulent injury claims in your neighborhood. These risk factors can include:

[Let CarInsurance.com help you find affordable auto insurance now.]

Your premium may rise or fall with a change in any one of these rating factors.

Drivers are normally grouped according to their level of risk.  For example, when you turn 25 it’s likely you will be placed in a different group with your auto insurer -- one with a lower base rate since those over age 25 tend to be in fewer accidents. 

A change in rating factors may lower your premium, but technically it is not a discount.

Related articles on CarInsurance.com

Disclaimer: This article is for information purposes. It should not be interpreted as a recommendation to buy or sell any insurance product, or to provide financial or legal advice. This information is provided for information purposes only.

Articles written by CarInsurance.com have a copyright and cannot be reproduced or republished in any way or form without the written consent from CarInsurance.com. You may use our RSS feed with an active link to our site.