The key factor in setting car insurance rates is the expense of paying for accidents and the costs associated with settling them. Other expenses relate to marketing the insurance (agent and broker salaries, commissions, expenses, and advertising), and general overhead (management and staff salaries and offices expenses). Expenses are partially offset by investment earnings on the premium dollars that have been received from customers but not yet spent.

The company tries to get a portfolio of customers that will be profitable. Since they cannot foresee the future, they try to pick people who, statistically, are likely to be good risks. They will look at the many classification factors they use to categorize their potential customers and decide if you meet their criteria. If they are willing to accept you, they decide how much you should pay based on where you fit such risk factors as driving record, age, sex, number of miles driven per year, type of car, and more.

In addition to your driving history, the following factors apply: 1. type of vehicle (model, year, and value): Statistics show that the accident rates are different for different cars. Some kinds of cars are also more expensive to repair.

How much liability coverage do you need? 1. Do you need collision coverage? 2. Do you need comprehensive coverage? 3. What deductible amounts do you want? 4. Do you want an agent, or can you buy by phone or mail? 5. Do you want to use multi-quote services? 6. What discounts might you be eligible for? a. Multi car b. Safety features on car c. Security features on car d. Driver’s education e.Good student

Consider your insurance as a backstop against major losses, not a way to pay for minor fender benders. Select larger deductibles, making sure you have adequate savings to pay the deductible amount if you have an accident.

No. The average driver with, perhaps, a few violations spread over many years and a car that is not extremely expensive or statistically at high risk of accidents would be classified as a standard risk. This is the pool of drivers that most companies insure.

The deductible is the amount you must pay toward a claim before your insurance begins to pay. For example, if you have a $500 claim and your policy has a $100 deductible, you will pay $100 and your insurance will pay $400. Selecting higher deductibles is one way to reduce your premiums. Of course, you must decide whether the monthly savings are worth the risk of paying more in the event of an accident.

The costs of buying and repairing cars continue to climb. Insurance companies need to cover those costs. Even if your driving record is unblemished, your rates and those of other drivers will climb to compensate for more and costlier accidents involving others in your state or insured by your carrier.

Annual premium payments are usually the most economical. By giving the insurance company the entire year’s premium, you avoid incurring additional administrative charges that add up with quarterly or monthly billing. Many companies charge a much smaller fee if you have your premium deducted automatically from a checking account every month. Check with your company.

The premiums could be going up because of something other than your accidents. The company may have been approved for a general increase. Check with your company about the reason for the increase. If you are not satisfied with the response, you can always check with other companies and see if they can give you a better rate.