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How is a car insurance premium determined?
indemnity companies figure out how to calculate policy premiums using their own unique formulas. Your total policy premium for car indemnity is highly personalized and typically based on a combination of criteria, including :
Reading: What is a car insurance premium?
- Your record behind the wheel: At-fault accidents and speeding tickets are key factors of car insurance premiums; the fewer incidents on your record, the less you typically pay. The one exception? New drivers. Your car insurance premium is typically higher if you’re a new driver because you haven’t yet established a driving history.
- Your age and demographics: Teenagers and senior drivers are considered higher risk behind the wheel, so they generally pay higher car insurance premiums than middle-aged drivers. Where you live also impacts your premium. For example, if you live in a densely populated city, there’s a greater risk of collisions, theft, and other harm. That could translate to higher insurance rates, especially if you carry comprehensive or collision coverage.
- Your car itself: If you drive an expensive car, your car insurance premium could be more expensive due to the cost to repair or replace it, assuming you have comprehensive and collision coverage. On the other hand, safety technology and anti-theft security features can help lower your premium.
- Your mileage: Many insurance companies consider how often you drive when setting rates. If you drive frequently and for long periods of time, you could see a higher premium.
- Your coverage and deductible: The more coverages you carry, the higher your car insurance premium will be. Likewise, the higher your coverage limits, the more you’ll pay. The deductible you choose also impacts your rate; a low deductible means a higher rate, while a high deductible means a lower rate.
Learn more about what impacts your car indemnity rate .
What is an insurance quote vs. an insurance premium?
An policy quote is an calculate of how much your policy will cost, provided by the insurance company before you buy. Your indemnity premium is the total you agree to pay for the coverage detailed in your policy, which is normally the same sum as the quotation mark you received. If you ‘re wondering how to determine what your annual agio will be, it ‘s best to get a quotation mark .
Read more: The Best Car Insurance Companies for 2022
What is a car insurance premium vs. a deductible?
As noted above, your car policy premium is the total you agree to pay for your policy. Your car insurance deductible is the sum you agree to pay out of pocket for certain types of claims, normally for claims filed under your comprehensive or collision coverage .
Is car insurance paid monthly or annually?
Most insurance companies let you choose between paying your car indemnity premium monthly, every six months, or annually. You could receive a discount if you choose to pay the full total for a six-month or annual policy upfront.
When do car insurance premiums go up — and why?
Policies from most indemnity companies get packaged in six- and 12-month policy periods. Assuming your coverages, driving record, and other basic criteria remain the same for that entire terminus, your agio typically wo n’t change. After that term period ends, your policy company may revise your agio, which could result in your car insurance pace going up or down .
Remember, insurers use their own unique formulas to determine their rates — and they continue to evaluate their policyholders over meter. A clean force phonograph record or switching to a dependable cable car can help lower the monetary value of your cable car insurance bounty. In contrast, getting a speeding tag or file multiple accident claims over a condition period could lead to a higher agio .
Looking for more information about car indemnity ? Our car policy resource center has you covered .