Insurance companies collect a lot of data on their customers to determine the appropriate rates to charge. Some of those factors might be foreign to some of you. That is why we have created a list for you below. That way you will not be surprised when you get some of those questions they are known to ask.
1) Make & model
Things like the make, model, and year are collected within the insurance companies to determine the rates. Say, for example, you want to buy a new car. Now that could afford you the chance to receive a lower discount. Some insurance companies do offer low discounts depending on how old the car is.
The car manufacturing company also plays a role. A foreign luxury car(like a Volvo) is going to cost more to insure. The model is another component to look at. The fancier model numbers are going to carry a heavier price tag. Here is the thing, models like SE and GT are different versions of the same make and model.
That is why you need to research each one to find out which one is going to cost more.
Sometimes it is better to go with a traditional four-door or two-door model. It is not because they are considered traditional. It is because they are going to cost less to buy and insure compared to other options. Sometimes it pays to stick with what you know.
2) The age matters
A driver’s personal information is the next thing that is compared. We hate to tell you this, but age does matter. The preferred rate is 25 years. Some of you might say that is age discrimination, and you are probably right. However, the age of the driver is a determining factor. Anything over or under 25 is given a higher rate.
The younger drivers are considered too much of a risk. Older drivers are considered a risk, but for different reasons.
The number of people you want to include in the policy is something else to consider. The more people you want to insure on your plan, the more of an increase you could see.
Other things like financial stability and your driving record are also part of the equation.
3) The profitability margin
Insurance companies want to make money. They are going to consider things like payment plans and the length of the policy. Now, keep in mind, that some companies are going to offer a reduced rate if you have been with them for a long period. The exact period is something you have to ask them.
There are state laws that the companies need to comply with. Say, for example, there are extra fees included with some of the policies. The insurance companies have to comply or they run the risk of being penalized themselves.
4) Where do you live?
That might sound like a strange question, but your location does matter(just like real estate). Do you live in a high-theft area? Do you live near an area that is blasted with insurance fraud? Then, your rates are going to increase. The reason is that the companies are already taking a big risk by having you as a client, it does not matter how great a driver you are.
5) Education is a big factor too.
Companies are more likely to offer a fair policy rate for someone well-educated(including college and PhD levels). Those who only have a high school level or below are more likely going to have their rates increase. Once again, this might not seem fair. Sometimes a person cannot always help their social, economical, and financial environment, but insurance companies have rules they need to abide by too.
6) Do you have a place of your own?
Policyholders who have a home of their own are going to see a reduction. The reason is that they can find ways to bundle other policies & car insurance quote into one. Insurance companies like it when homeowners bundle. It means less paperwork for everyone.
7) Do you have prior limits for liability?
That means that you have something like a 100/300 ratio. A reduced rate will most likely be offered if you carry a preferred liability rate.
One thing to know about preferred limits: The agent is only interested in your past. They are not going to talk about what you have right now. A good rule of thumb is to work towards the 100/300 mark.