by Ed Sneneineh, Chicago Auto Insurance Agent
There are a number of major factors for determining the rates of private passenger automobile insurance premiums. These factors apply to both private passenger auto policies and SR22 insurance policies.
Auto Insurance rates and Credit Score
Most standard companies run credit check on applicants to determine their insurance score. People with better credit enjoy lower auto insurance rates.
Territory & Auto Insurance Rates
Each state is divided into rating territory: Large city, a suburban, or a rural area. Largely the territory where the auto is principally used and garaged determine the base auto insurance premiums.
Insurance Rates and Age, Sex, and Marital Status
The vast majority of states allow the use of age and sex as factors in determining premiums. Age is an important rating factors because younger drivers cause disproportionate rations of auto crashes. Young male operators who own or are the principal drivers of cars usually pay the highest premium, since this group of operators cause more accidents, and the accidents they cause are the most destructive. Married operators enjoy lower car insurance premiums. This especially applies for younger drivers.
Use of Vehicle & Insurance Rates
For insurance purposes vehicles can be classified according to the use for which the vehicles are driven.
Insurance Rates for Pleasure Use Autos. Vehicles that are not used to commute to work or school on daily basis, or those that are driven less than certain miles per day (ie 3 miles one way) may be classified as pleasure vehicle. Insurance premiums for this class is the lowest.
Insurance Rates for Drive to Work/ School Autos, is perhaps the most common use of private autos class. Example of work/ school use includes using the vehicles to commute to and from your place of work or school. Some companies may even charge higher premiums if the daily use is over certain miles one way (ie 20 miles).
Insurance Premiums for Business Use Autos. If the vehicles is used for business pursuit (outside sales, delivery, etc.) the class is different and clients may have to pay more insurance premiums for business use autos.
Insurance Rates for Farm Use Automobiles refer to autos that are used for farming purposes. These vehicles also has low cost for insurance purposes.
Operator's High Education Lowers Insurance Rates
Auto insurance companies found some correlation between applicant's education and rates of auto crashes and car insurance claims. Applicants with higher education enjoy higher percentage of discounts.
Good Student Discount
This discounts is offered by limited number of insurance companies for certain drivers who are classified as good students. The qualification for this discount includes age requirements and GPA requirements. Some companies may state that student with GPA of 3.00 or better, over age 16, and who are full time students may qualify for this discount. A report card is needed by insurance company to validate the discount.
Number and Types of Insured Vehicles
Having more than one vehicles on the policy may qualify the insured person for 'multi car discount.' Individuals seeking full coverage may be charged according to the value of their vehicle, or according to the performance of the vehicle.
Driving Records of Insured People
Safer drivers enjoy better rates than operators that have issues on their driving record. Most insurance companies will check the MVRs of all members of the households before a policy is issued.
Comprehensive and Collision Deductible
For insurance policies that include comprehensive and collision coverage higher deductible means lower policy rates.