How to Determine Auto Insurance Rates

An accident raises your insurance rates.

Proof of financial responsibility in the event of an accident is a requirement in all 50 states. Most people find that auto insurance is the easiest way to fulfill that requirement. There are several sections to an auto insurance policy, and the one that covers financial responsibility is the liability section. Lending institutions require that you insure the car until you pay off the loan. Coverages include comprehensive and collision insurance. If you want to determine the auto insurance rate, you need to know what coverage you want.

Things You'll Need

• Driving history
• List of company discounts
• Make and model of your car

Instructions

1. Start by examining your driving record. If you have a clean record with no tickets or accidents in the past five years, most companies offer a "good driver" rate. The more tickets and accidents you have, the higher the premium increases.

2. Understand that if you're a young driver, you'll pay more for auto insurance. Insurance is higher for drivers between the ages of 16 and 25. One reason is that men younger than 25 have more accidents per capita. Often, insurance companies reduce the rates slightly every year as the driver approaches 20. The premium then remains level for ages 21 through 24. A senior discount is available through many companies, as well. Some of these discounts begin at age 50, and others at 65.

3. Some insurance companies give married individuals a price break when they reach 21. Unmarried males normally have to pay higher rates until they are 30, but it's not unheard of for companies to charge them more up to age 49. Most insurance companies give a discount earlier for girls, and the best rates to married women. This, however, is slowly changing as more women drivers take to the roadways, thereby changing accident statistics.

4. Drive further and you'll pay more. If you don't drive to work because it's next to your house, you'll get the best rate. People such as insurance agents who use their car for business, pay the highest rates. Annual mileage makes a difference, too. If you carpool to work, mention it to your insurance agent as the lower miles you're drive could get you a lower rate.

5. Check the make and model of your car. If you get comprehensive and collision coverage, the rate varies by the value of the car, average repair costs and theft risk. It also makes a difference whether you garage park your car or park it on the street where it's more prone to damage. You also can reduce the cost of your insurance by selecting a higher deductible, the amount you pay out of your pocket if you have an accident.

6. Insure the other driver with your liability section. The cost of the liability section depends on age, mileage, driving record and the liability limits you select. The higher the limits, the more it costs. For the average driver, the difference between the state minimum and $100,000 is minimal. If you have a lot of tickets and are younger than 21, it becomes quite expensive.

7. Shop for discounts. There are good student and driver's education discounts for younger drivers, senior citizen discounts for older drivers and multi-car discounts for those owning more than one vehicle. Some companies give a discount if you have more than one type of policy with them, such as a homeowner's or life policy. You'll make the payment drop, as well, if you pay a specific way. Often, automatic monthly premiums are as low as annual ones, with monthly direct payments being the highest.