How Are Car Insurance Rates Established?

March 12, 2010 - PRLog -- As insurance premiums increase, it's important that you stay updated and know more about the different insurers and comprehend precisely what aspects influence the rate of a car insurance policy.

Generally, a major thing in determining auto insurance rates is the cost of paying for accidents and other expenses involved in settling them. Other costs have to do with marketing the insurance, which include commissions, broker and agent salaries, and advertising. They also have to do with the general overhead, which are the management, staff and office expenses. Costs are partly offset by investment earnings on the premium dollars that come from the customers but have not yet been spent. Auto insurance underwriting outcomes often go through a cycle that goes on for many years. Auto insurance companies choose to have surpluses over underwriting and expenses so that profit may be made through investment earnings. Several states also make it mandatory for insurance companies to have minimum cash reserves, which can influence premiums.

Other Factors That Effect Car Insurance Rates:

·   color of your vehicle
·   driving record
·   number of cars you own
·   payment history
·   number of drivers and their age
·   claims history
·   insurance credit score
·   main purpose of your car (business, pleasure, etc.)
·   area you reside in
·   mileage
·   type of coverage preferred by the customer
·   occupation

Basically, car insurance companies just don't want to have to keep paying for damages or injuries. For instance, if you have a bad driving record they will feel like you're just going to get into another accident, which THEY will have to pay for. Thus, they would not take that risk and increase the rate instead. If you feel you have a glitch in your information that you feel will work against you, try to find the more positive aspects about yourself and enhance those. For instance, there are some companies that give discounts if you are a student and have good grades. Taking safety courses and putting that in your record will also help considerably.
It is important to note that your driving history will be the focus of most auto insurance company's (http://www.auto-insurance-company.com/). It may not be fair, but even if you consider yourself a very cautious driver, the driving history is almost always connected to the age of the driver in terms of statistics – auto insurance companies may base their decisions a lot on these statistics. So the younger you are, the higher the rate may be. Again, use the other factors to work your way to a more affordable policy.
Look Around

Browse through different insurance companies that catch your interest and request for a quote. Obtain more precise quotes by giving them more relevant information. Ask for recommendations from people you trust and read through online reviews and customer feedback. Check each company's background by making sure they have a working contact number, physical address and license, as well as by calling the Better Business Bureau. Once you know what type of policy you really need, start comparing prices based on the type of policy offered.

Post provided by Dataflurry Auto Insurance (http://www.dataflurry.com/industries/insurance.html) Search Engine Optimization

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Article distributed by Joel McLaughlin. These press releases are used to help inform the public of new valuable information relating to several different industries.