Have you ever wondered how auto-insurance companies determine your quote? Or why quotes differ vastly by insurance providers? One of the main factors has to do with how insurance companies determine your risk profile: the likelihood you will get into an accident. This is assessed though the personal information and history you are asked to provide.

Although factors may vary by state and company, they generally include:

  • Age
    • Insurance companies can charge a higher premium for people who are 25 or younger as statistical studies have shown that they have a higher risk of being involved in an accident.
  • Marital status
    • Studies have shown that marital status is correlated with the likelihood of an accident. Married couples are less likely to get involved in accidents and hence, are often charged a lower premium.
  • Credit based insurance scores
    • In some states, insurance companies use your credit history to help determine your risk profile. A clean credit history usually lower insurance cost.
  • Type of coverage
    • Choosing the minimum required coverage will lower the insurance quote as you will be taking more risk. The more coverage you add, the higher the insurance quote.
  • Address
    • Insurance companies use your ZIP code and address to assess if you live in a neighborhood that is considered dangerous or known for having a high number of auto thefts.
  • Occupation and education
    • Accidents have found to be correlated with certain job occupations or education levels. Insurance companies use this information to help determine your risk profile and often provide discounted student rates as well.
  • Coverage limit
    • The lower the coverage limit, the cheaper the insurance quote as you will be taking more risk.
  • Deductible limit
    • A car insurance deductible is the amount of money you must pay toward repairs before your insurance covers the balance. Higher deductibles reduce insurance quotes as you will be paying more of your own money before the coverage is applied.
  • Driving history and experience
    • Insurance companies can look at your driving history and experience as an indicator of how safely you drive
  • Annual mileage & usage
    • The more miles you drive, the more likely you are to get involved in an accident, hence the more expensive the insurance quote.
  • Type of car
    • Some models have higher or lower repair costs that can affect the insurance quote.

These are some of the factors pertinent to you that may affect the price of your insurance.  Different insurance companies weigh these factors differently, and so it is important to compare quotes to get the best price. Sigo works with several insurance partners to try to get you the right coverage for you at the lowest price.