How to compare companies for car insurance

Saturday, March 1, 2014, 1:00 PM | Leave Comment

By now we all know that to find the cheapest car insurance rates, we have to go online, ask for free online quotes for car insurance, compare the different quotes on car insurance comparison websites, and then alone choose the company that best suits our requirements.

But finding the cheapest insurance is not just about comparing price and picking the company offering the least price.

You can reduce your monthly premiums and compare companies better if you know how insurance rates and determined, factors that affect the insurance rate, discounts provided by some insurance companies, etc.

Here’s some information to help you understand car insurance better.

Many consumers have no idea how insurance rate is determined. There are two factors that determine what you pay for your car insurance.

The first is what they call the underwriting and the second is the rating. Underwriting basically means assessing the kind of risk the insurance company is taking by giving cover to the applicant, while rating is based on the underwriting process.

According to the risk associated with the client, the rating assigns a price. The insurance company believes this price is the cost to assume financial responsibility for the customer in case of a claim.

The underwriting and rating system for each insurance company may be different, although there are some general guidelines all of them follow.

For instance, claim frequency is one of the major factors to influence the rating process. All the clients with the same characteristics as yours are put in one group.

And even if you are a safe driver and have no previous claims, the group is evaluated as a whole. That means if you are amongst a high claim group, you will most likely be charged more for your insurance cover.

Other factors that affect your insurance rate are your age and gender, your driving record, the car you want to insure, your geographic territory, your marital status, prior insurance coverage details, and the average mileage run by you per year.

  • Age and Gender

    According to statistics, males have more accidents and certain groups have more claims. This is the reason women drivers find cheap insurance, especially if they are in a job where they work. Also, studies prove that women are more careful on the road and obey traffic laws and regulations.

  • Driving Record

    Drivers that have been involved in accidents in the past, have traffic violation tickets or rash driving records are considered to be high risk clients and are charged higher than those who have good driving records.

  • Car Model and Make

    Sports car and high end luxury cars average a higher number of claims, thus cost more to insure.

  • Address and Territory

    Urban areas have more claims than rural localities. Also, if you live in a neighborhood where your car has to be parked on the public street or is at risk from theft, you will be charged more as compared to territories and addresses known to be safe neighborhoods.

  • Marital Status

    People who are married are supposedly show lower percentage of claims.

  • Prior Insurance Coverage

    If you have claimed insurance in the past, or if your insurance has been cancelled for not paying the premiums, you may have to pay higher premiums.

  • Vehicle Use

    The number of miles you do is directly proportional to the exposure to risk. This is why people who drive extensively pay higher premiums than those who limit their miles per year.

Understanding these factors and using them to your advantage can be the best way to not only find an ideal insurance company, but also the cheapest car insurance rates.

Author Bio

Stan is a freelance writer for the He mostly writes about how to get the cheapest car insurance rates in US, how to find the perfect company for your desired insurance covers, how to compare insurance companies, etc. his other hobbies including reading and gardening. He is also an avid traveler who likes exploring new countries, every chance he gets.

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