How is the price of your auto insurance calculated?

How is the price of your auto insurance calculated?

Very different variables apply to the calculation of the price of auto insurance. Each one is weighted by each insurer based on its own accident statistics mainly, but also considering what happens throughout the country, in each state or locality. 

They are then extrapolated to forecast the index for each type of claim and for each car and age, obtaining what can be expected for the year in which the car will be insured. The main variables are:

Car value

Generally, the invoice value is used for new cars, for others the EBC price guide, also known as the Blue Book, is used, in addition to the appraisal. This price depends on other variables such as the make, model, complete description of the car, and if it has a special factory or add-on equipment.

Place of residence

The price of auto insurance varies widely due to different theft and accident statistics for each location. Statistics by state generally apply and, as mentioned, insurers rely more on their own claims statistics. This generates large price differences between insurers.

Age of the driver or drivers

Young people under the age of 26 or 30, according to each insurer, are the ones who pay the most for auto insurance. If they are under 18 the insurance will be even more expensive. Later, prices rise again as the person gets older.

Driver sex

Statistics show different claims results by gender, so this implies a different cost for men and women.

Driver’s marital status

People who are married and with families tend to be more careful when driving, so this variable also affects the price.

Occupation of the driver or drivers

People’s occupation is also an indicator of whether they can suffer more or fewer car accidents. For example, a salesperson who uses his car for work has a higher risk of accidents.

Vehicle use

A car for private use is less risky than one used to transport goods or for public service.

Driver’s driving history

In various insurers, it is possible to obtain discounts on the normal price of the premiums by having a history without accidents.

If you want to know more, access the link How car insurance prices are calculated.

Selected deductibles

You can buy auto insurance without deductibles, but they cost more than those with a deductible. The insured must evaluate if they want to be covered for any damage or only from a certain amount, so they can pay more affordable premiums.


Coinsurance also helps make premiums more affordable, but it means less coverage from the insurer. Each insured must evaluate the appropriate level of coinsurance in the coverage in which it applies. 

It works as a percentage that you must pay on each loss, where the insurer will pay you the remaining percentage that you give one hundred percent.

How can you save on your auto insurance?

The best way to save on auto insurance is by requesting quotes through quotes such as Quoratv. Although the best insurance is the one with the best and most extensive coverage, it is likely that this can be very expensive for many people, so the right plan should be chosen as follows:

Make sure the plan has good liability coverage, including catastrophic. This will avoid losing a lot of money in the event of certain accidents.

Contract the total theft coverage with or without a deductible. The higher the deductible the price of the policy decreases and the lower the deductible the premiums increase. Choose according to your financial possibilities and the risk you want to absorb in the event of a claim. Do something similar with the material damage coverage. Policies without a deductible are much more expensive. The amount of the deductible will allow you to lower your premiums and absorb the small damages that your car suffers.

If you have an economic situation that allows you to contract additional coverage, do so. Any premium expense will seem small to you in the event of an accident.

Frequently Asked Questions about Car Insurance

How much auto insurance can I buy?

You should only have one policy for each car. If you have more, it is considered that you want to profit from accidents, so if you hire more, each insurer will pay only a fraction of the compensation, in such a way that between all of them they pay the same as a single one would have paid.

If I applied for auto insurance and I had an accident before receiving the policy, am I covered?

It depends on whether the insurer has already issued the policy. Having issued it, it has an effective date and if it is prior to the accident then the insurer covers the damages even if you have not received it or paid the premium. It will only deduct the corresponding unpaid premium.

Can I save money by purchasing my child’s car insurance in my name?

When young people are going to drive a car, it must be clearly declared before the insurer to prevent it from invalidating the policy in the event of an accident. By saving a little money the car could really be left without protection. It is true that the car can be in your name and be driven by another person with your permission, but if it is a minor under 25 years it must be declared since the insurance for them costs more. As the data of the young person is in the policy as a regular driver, any problem is eliminated.

If I have wide coverage insurance and I get into a flooded street, does the insurer cover?

Comprehensive coverage policies include protection against natural events, such as flooding from rain or overflows. However, if the street is flooded and you still decide to get into it, the insurer may not pay, considering an intentional aggravation of risk.

I received the policy with an expiration date before the current day, can I pay it?

Of course. The expiration date in insurance is the first day the policy must be paid and there is a month for it from that date. If you have already exceeded the month then you should contact the insurer.