How Do Car Insurance Companies Come Up With Their Quotes?

You go onto a car insurance website, you put all of your details in, and it comes back with a price. Most of us just find the cheapest one and pay it, but we rarely stop to question how that price is actually calculated. Knowing how the price is worked out in the first place can help you to make changes that will reduce the cost of your car insurance. So, how exactly do they work out that price?

Age

Your age is one of the biggest factors that affect the price. Younger drivers between the age of 17 and 25 are going to be subject to far higher prices than people over 25. Unfortunately, there’s nothing you can really do about it. It’s a common misconception that as soon as you hit 25, your prices will plummet immediately. In a lot of cases, they do drop drastically but that’s not always the way so don’t be counting on that. 

Your Job

You wouldn’t think it would make that much difference to your personal insurance but your job description dictates how much time you spend on the road so the insurance companies will take it into account. If you’ve got a higher paying job then you’ll probably get a higher quote. If you can rephrase it so it sounds less senior than it is, you could cut your costs. It’s also a good idea to use sites like cheapautoinsurance.co to check lots of different providers because different companies will charge their own prices for certain job descriptions. Try different job descriptions with different companies to find the cheapest deal possible. 

Your Car

Obviously, your car is going to be one of the biggest factors in the price of your insurance. The cash value of the car is the first thing that they look at. The more expensive the car was to buy, the more expensive it will be to insure. If the car is rare it’ll be more difficult to get parts to repair it which will jack up the costs of insurance as well. The power of the car is something you need to consider carefully as well. The more powerful the engine, the more likely you are to get into an expensive accident so that’ll increase your price as well. The popularity of the car isn’t something that people always think about but it makes a big difference. If your car is very popular, the insurance company will be more worried about the risk of theft so they’ll charge you more money.

Where You Live

The location of your house is also a big indicator of how likely you are to claim on the insurance. In a built up area, you’re more likely to get into an accident. Equally, if you live in an area that has a high level of crime, your insurance bill is going to be massive. The price can change drastically in the space of a few streets so even if you live on a relatively safe road, you might still be paying over the odds if you live near a dangerous area. 

Now that you know exactly how insurers come up with their prices, you can take steps to reduce them.