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How does the Insurance Company Determine the Cost of Each Driver on My Policy?

Thanks to online comparison tools, car owners looking for the best auto insurance coverage can look at competing quotes from a range of insurance companies. Many wonder how a company determines the cost of each driver on a given policy, which has a large impact on rates and savings.

While each company is different in this situation, there are some general points to make that can help auto owners understand what occurs. These dynamics can certainly play a big role in overall coverage prices.

Factors that Can Play a Role in Auto Insurance Rates

Any driver(s) that is present on a policy will be subject to a variety of areas that can impact rates. Some of the following areas are typically used to assess a driver and his or her cost(s) on a policy:

  • Demographics: Age and gender are often used in determining insurance rates. Location is an important factor as well, as some locations can command much higher rates than others.
  • Driving Record: Having an accident or two can raise the cost of coverage. Other negative marks on a driving record, such as a history of speeding tickets or DUI offenses can take a toll on an insurance policy.
  • Driving Habits: What is the annual mileage for a driver on the policy? Certain driving habits can offer some savings. Drivers that qualify for low mileage discounts can enjoy impressive savings.

A number of other factors will affect rates on an insurance plan. The make, model and age of each car along with the type of coverage desired, for instance, play a significant role in any policy.

The Specifics of Your Situation

Every policy is different. Since companies calculate policy rates differently, it is possible to have a large difference in two similar plans for the same driver(s), car(s), and coverage amount(s).

A good option is to speak to your insurance agent about your needs. You will be able to get advice about your specific situation, as well as any questions that you may have along the way.

By speaking to your agent, you will be able to find out how much your intended policy will cost. You can also make changes to your coverage that could make a difference in your premiums. Your agent will be able to guide you along the way, making sure everything is in your best interest and to your satisfaction.

Overall, it is difficult to know exactly how a company determines the cost of each driver on your policy. There are indeed differences between companies, and those outside of the company do not have access to the specifics. 

For you to understand the difference in the way the insurance companies calcuate the premiums, you can enter your details on this website in order to get quotes from multiple insurance companies. This is one-time entry, safe and fast. You will get accurate quotes real-time within a few seconds.

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