How Are Car Insurance Premiums Calculated?

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Car insurance premiums are calculated using a few different pieces of information. Find out about how car insurance premiums are calculated with help from an independent insurance agent and small business owner in this free video clip.

Part of the Video Series: Auto Insurance
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Video Transcript

This is Melissa Morley with All Seasons Insurance, and today we're going to discuss how car insurance premiums are calculated. This is really good information for you to have. The more information you, have the better informed consumer you are. The more likelihood your going to save money and have all the coverages that you're looking for. Nowadays insurance premiums are calculated on a whole lot more than they used to be. It used to be are you a man, are you a woman, how old are you, what kind of car do you drive and how many accidents and tickets do you have. Those are still figured in, but along with that, where you live, your location, how many other people like you in your location have had automobile accidents, what is the loss history for that particular zip code that you're in. Included and very, very important to insurance nowadays is credit. Somehow insurance companies have created an algorithm that can show, and it's been held up through court, that people that have lower credit scores are more likely to have accidents. This is a situation that many people ask me, why do they do that, how can they do that? My answer to you is it's been upheld in the courts that insurance companies have proven that their algorithm does rate and the insurance commissioners have allowed this. So be aware that when you go shopping for car insurance that you need to know how the calculations are made that determine your premium which include age, whether you're a man or a woman, your zip code, the car that you're driving, how many cars are on your policy, if you also have other policies with that company, if you can bundle them. And your credit score among other things. So always go shopping. This has been Melissa Morley with All Seasons Insurance. Today, we've been discussing how car insurance premiums are calculated.

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