Many factors come into account that determines what consumers will pay for coverage; companies base their premiums on the risk associated with insuring a particular individual and the prior profits and losses they may have had with similar customers. The most common factors used by carriers to calculate a premium is the drivers’ ages, gender, driving history, place of residence, marital status, vehicle year, make and model and depending on state laws, credit history; many providers believe that a person’s credit history can have a direct correlation with the chances of them filing a claim.
As mentioned, the average is based on the entire nation and geographical areas can play a big part in what premiums will cost. For instance, the average premium in North Dakota is far less than that of New Jersey; the reason for this is that rural areas have far less vehicles on the road than urban or metropolitan areas which lowers the chances of a loss and may allow insurers to offer lower monthly car insurance rates. In addition, some states may have a higher crime rate than others which may also cause the cost of coverage to become more expensive due to increased risk of losses.
Additionally, consumers should be aware that vehicles can have a big impact on premiums; usually the more expensive or sporty a vehicle is, the more it will cost to insure. Expensive and exotic vehicles are generally costlier to repair or replace and therefore the price of premiums for Comprehensive and Collision will be directly affected. Certain sports cars are statistically shown to be involved in more traffic accidents and depending on the model the rates for Liability and Collision may be a little higher than a less speedy vehicle. Insurers will also view theft rates of automobiles and particular models happen to be stolen more often than others; insuring a vehicle that is a target of theft can increase the price of Comprehensive coverage.
The types of coverage desired will also affect rates; a basic liability policy will cost far less than more extensive policies. Consumers have many choices in protection when it comes to auto insurance and depending on the motorist’s needs, the cost of the policy can vary. The best way to keep the price of monthly premiums affordable is to determine the amount of coverage needed and complete a quote comparison from various insurers to see who can offer the best rate.