In most states insurance companies allowed to set up their own rates and do so by using certain risk factors or rating factors to calculate a driver's auto insurance rate. These factors are important because statistically they can help determine those motorists that will be more of a risk for an insurance carrier and thus their rates will be higher. The factors are important for a driver or policyholder to know so that they are sufficiently informed on what criteria their rates are set.
Risk factors help insurance companies determine the premium rates as accurately as possible. There are many risk factors. Here is a list of some primary factors that most insurance companies use:
- Age
- Gender
- Marital Status
- Geography
- Driving Record
- Claims History
- Vehicle Type
- Occupation
- Education
- Miles driven each year
- Years of driving experience
- Type of vehicle use (business, personal, commuting, etc.)
- Current insurance and current insurance limits
There are many ways to lower your insurance rates; here are a few simple ways. Shop around for multiple auto insurance quotes. Be sure that the quotes you are comparing are for the same coverage so that you are comparing apple to apple and not apples to oranges so to speak. You can request higher deductibles for comprehensive and collision coverage. Ask about discounts. Maintain a good driving record and credit history.
Rating factors that you can change more easily than others are the type of vehicle you drive, the miles driven each year and the limits of your policy.
Rates for Comprehensive and Collision are based mostly on the age of your car and the cost of your car when it was new. If you own a newer or higher-end car, you will normally pay more to insure it. This is because these cars cost more to repair or replace than an older car or a lower-end car.
Also, certain cars are more easily damaged or expensive to repair than others. Some cars protect passengers better. Rates reflect these safety devices and traits.
In order to determine if you think physical damage (PD) insurance, comprehensive and collision, are still necessary for your vehicle first determine the value of your vehicle. You than can weigh the value of your vehicle against your PD premium, as well as the deductible amount you would pay if you needed to use the coverages.
An older vehicle that has a lowered actual cash value (ACV) may not be worth the extra expense of comprehensive and collision coverage. You do not want to pay more for insurance than the vehicle you are protecting is actually worth.
If you decide want to keep collision on the vehicle, you may see if you can lower your premiums for these coverages by raising your deductible. You may also see if there are any discounts available to you.
If you decide that your vehicle does not need physical damage coverages any longer, you still will need to keep the state minimum liability insurance on the vehicle. And if you have a lien holder on your vehicle then they likely require both collision and comprehensive coverage be kept on the vehicle until the car is paid off in full.
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