Ever think the making of Car Insurance rates are as secretive as the Illuminati? Has this ever happened to you; your neighbor about the same age and has the same car is paying $1,500 a year less? Why does this happen? Why does it seem that there is no logic or consistency to developing Auto Insurance premiums?

The answer is: "It's Complicated". Typically there are rating factors that go into making an insurance premium. Here are the most common:

Driving Record: How many moving violation do you have? Obviously drivers with a poor driving record have a more likely chance of getting into an accident than somebody who doesn't
Insurance Claims History: Those with claims are more likely to have more claims than those who don't. Thus, a poor claim history will pay a higher rate than people who don't.
Credit History: This is a controversial factor. People understandably don't like to share their credit information. Most states, however, allow insurance companies to use credit history as a determining factor. Like it or not, they have proven that people with poor credit have more claims than those who don't. Therefore, they are able to charge a higher premium.
Car Type: Obviously a Porsche 911 will be more expensive to insure than a Toyota Camry. They go faster, and when there is an accident, it is much more expensive to fix.
Garage Location: Where does the car sleep at night? Theft rates are higher in more urban areas. Also, civil courts in these areas tend to award more in a "Bodily Injury" claim.
Age and Gender: Young people have more accidents than older people. Boys have more accidents than girls. It's that simple! Young boys are by far the highest risk of accident age group. The insurance companies know this and charge accordingly.
Marital Status: Marriage does calm people down. When you are responsible for others, (spouse, kids, etc), one tends to act more responsibly.
How Much You Drive: In this case it's simple math. If you drive 20,000 miles a year, you have more exposure on the road than somebody that drives only 10,000 miles a year.
Education: Really? Yes, people with higher education, (college, masters degree), will have a lower claim history than those with only a high school diploma or less.

I'm not defending insurance companies here, but understand that they cannot simple decide to use a rating factor out of thin air. They must prove to each and every state that approves rates, that these factors are statistically relevant. For example, despite the myth, there is no evidence that people with red cars get stopped by police more than those who don't. Therefore, insurance companies cannot charge a higher rate for red cars.

Each insurance company regards these factors differently. One insurance company might determine that credit history is of greater importance than the type of car you are driving. In general, however, the top factors in determining rate are: Driving Record, Credit History, and Claim History. Insureds with good credit, no tickets or accidents will almost always pay the lowest premium regardless of what kind of car they drive or where they live.

I hope this sheds some light on this very confusing issue. If you have any questions do not hesitate to reach out to us at 888-997-9801 or visit our website at www.brookswaterburn.com

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