How Car Insurance is Calculated and How to Save Money

If you ask your friends and family members how much they pay for car insurance, odds are you’ll get a variety of numbers and policy types. Although many insurance companies base their rates on similar factors, insurers also use different algorithms with varying factors to calculate your rates. There are many variables that can affect your rates, depending on which insurance company you choose. Here’s a look at some of these factors that determine your rates and how to lower your costs overall.

Personal Factors

Some factors that most insurers look into are based off of your personal information. Unfortunately, not much can be done to save in these areas, but it is still important to see how car insurers use these factors to calculate your rates. 

Some of these personal factors include things like age, sex, geographic location, marital status and more. There have been many studies done on these factors that have helped insurance companies in their calculations. For example, some studies show that young male drivers are more accident prone than young female drivers, and married couples are less likely to get into accidents than singles. Some locations are more dangerous than others, which increase the rates for people in those areas. 

Your Car and Driving Records

The type of car you drive and your driving history also contribute heavily to your rates. Many insurers look into make and model statistics and any corresponding claims reports to determine which cars are more likely to get into accidents than others. 

Insurance companies also look into your driving records and past insurance claims. If your records show past tickets, accidents or at-fault insurance claims, you may be subjected to higher rates. 

How To Save Money on Car Insurance

As you can see there are many factors that contribute to your rates. While some things are beyond control, there are many ways to reduce costs. Here are some tips to help you save.


1. Shop around. By getting multiple quotes, you can ensure that you are getting the best value for your money. Almost all insurers offer different policies and coverage so it is very important to see what they offer and what works best for you.