What Goes Into a Car Insurance Rate?

When you’re buying insurance for your vehicle, the value of the vehicle plays a role in the price of your coverage, but a number of other factors help determine the cost as well. In some cases, insurers evaluate literally thousands of data points when assigning a premium for the policy. Fortunately, computers do the heavy lifting, so the process is quick and accurate, and your policy premium is closely matched to your unique risks.

Where you live

Your location can play a big role in the cost of insuring your vehicle. People who live in cities may pay higher rates than those in less-populated areas with fewer vehicles. However, because this is just one area of consideration, living in the country doesn’t guarantee a lower rate — but it can help.

Your age and gender

Insurance premiums are based on statistical data, which means we’re all being sorted by groups when insurers set premiums. Age is a consideration, with younger drivers and seniors often paying more for coverage. Gender can play a role as well with some insurers, although in some areas gender can’t be used to determine premiums.

The amount of driving experience you have

Insurers aren’t picking on younger drivers. Where younger drivers may pay higher premiums on average, often this also reflects the amount of driving experience you have. Experience is the best teacher, helping us learn what to watch for and helping us spot potential trouble on the road. More experienced drivers have fewer accidents, on average.

Household driving history

Your insurance company is also considering your driving history as well as the driving history (and insurance claim history) of others in your household covered by your policy. Moving violations and accidents can be costly because they may indicate risk. Safer drivers are often rewarded with lower rates or additional discounts.

The car you drive

Your car’s value, as well as its repair costs, are also considered. With today’s high tech cars, a simple fender bender can cost thousands to repair — and some types of cars are costlier to repair than others. Expect theft rates to play a big role as well.

Your car’s safety features

It’s time for some good news. The safety features in your car not only keep you and your family safer but often they bring lower premiums as well. In the background, your insurer is considering everything from airbags to car alarms designed to keep you and your vehicle safer.

How your car is used

If your car is parked in your driveway, there isn’t much risk of an auto insurance claim. Driving the vehicle is where the biggest risk really begins, and the more you drive the more risk there can be. Expect to pay a bit more if you drive more than average but some insurers also offer a discount or a preferred rate for drivers who drive less than average.

Often, there are a number of discounts available to help reduce the cost of auto insurance coverage, like good student discounts, senior discounts, or discounts for completing a defensive driving course.

Just reach out to your agent or broker to review your coverage and learn which discounts may be available to you.

Have any questions? We can help.

Contact us—we can help you access and use your MyMills portal and app.
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