How Do Auto Insurance Premiums Work?
The Risk Factor Auto insurance premiums are different for each individual. Two people with the same driving record could have very different premiums, depending on the risk factors present in each individual’s life. Some, such as your credit report, have nothing to do with your driving record. There are many common factors in determining insurance premiums, but laws can differ state to state. The most common factors include age, gender, type of vehicle and what the vehicle is used for (pleasure or work). Most insurance premiums start at a determined base rate, and then are adjusted depending on the risk factors. Many insurance companies now use an insurance score, which is based on a specific formula–similar to how your credit score is determined. The basic premise is the higher the risk, the higher the premium. Most Common Risk Factors The most common risk factors include: * Age–even if you have a perfect driving record, your age plays a factor in determining your premium. Younger d
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