How Are The Average Car Insurance Rates Determined?

By Robert Fredricks Posted in Car Insurance News



Insurance companies use statistical tables to determine all aspects of their business. They use these tables to determine the average car insurance rates for every class of driver. Statistics are also used to determine the rates for the type of car being insured. Statistics are based on how likely a claim will be made. Claims usually cause the insurance company to pay out money.

Determination Of The Class Of Driver

An elderly driver and a young driver with little or no experience and driving record are statistically considered riskier to insure than other drivers. This means, the average car insurance rates of a young driver and elderly driver will be higher than rates of other differently aged drivers. This is not to say that within this group of people paying higher than average rates, there are not some good drivers. The statistics would point out that there would not be enough of them to offset the higher claims that would be made by the others.

Average car insurance rates for safe drivers, who have taken defensive driving courses and instituted other safety features, that would cost the insurance company less than the average driver, will get better rates. A safe driving record will also help keep rates down.

Type Of Cars

An older car will have higher rates than a used car because of the lack of having to supply collision and comprehensive coverage. The reverse is true for a newer car. A car that is statistically proven to be driven fast, recklessly or having a propensity to be stolen often, will entail higher average premiums.

Where You Live

Where you Live Will Determine rates as well. A rural area with less crashes will have a lower premium. Living in a city will be higher. An area of high theft within a city will have higher rates, if that car has fire and theft coverage.

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