Have you ever wondered or do you want to know why insurance companies charge high premiums for insurance coverage? Some of the most asked insurance question is, “Why is my insurance rate so high?”

Companies rate each driver according to an algorithm they build in order to make a profit after paying out for all the claims people make and the cost of operation. If a company had no claims to pay out, insurance premiums would be extremely low. To save money it’s important to better understand insurance rating.

The truth is, accidents happen every day; so does theft, vandalism and even insurance fraud. No matter how well you drive you cannot escape all risk. If your 50 years old with no accidents and no tickets but you live on a side of town where there’s a lot of crime, vandalism and theft, you may be at more risk than one of your peers with a ticket who’s living in the suburbs. Your driving history is only one factor in the rating – a big factor, but still a single factor.

Is your vehicle unsafe? Does it perform well in crash tests? Is your car a heavier vehicle that may have too much impact on a smaller car? These are just a handful of the questions Insures study to help determine the algorithm for rating the risk of your vehicle. They also take the age of the car, the safety features, air-bags and whether the car has a security device installed.

Is your insurance really over-priced?

Cable cost an average of $60 per month and you get the entertainment of one the best inventions ever made – T.V.
You can usually pick up a low premium basic auto insurance policy for about $60, often times less. For this price, now called your premium, you can avoid being sued, cited, fined or even put in jail. With a basic liability auto insurance policy, if you’re negligent in an auto accident your liability coverage is there to protect you financially. This could end up saving you thousands.

Learn more about insurance rating.