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California Brokerage Insurance Associates Blog

All You Ever Wanted to Know About Insurance

Reasons Every Insurance Company Has Different Rates

Driving a car

Buying a new vehicle is an exciting moment, but also a reason why you may need to see a car insurance broker in San Diego, CA. As a vehicle owner, car insurance is essential to protect your purchase and keep you and your loved ones safe out on the road. Throughout your search for the right auto insurance broker to secure auto insurance from, you will likely discover that every company offers different rates. This may seem a bit confusing to you and make it difficult to decide on the best coverage choice for you. Here is everything you need to know about the variation in auto insurance rates, and what this means for you as a driver and vehicle owner.

Rating Factors

Car insurance premiums are based on several rating factors used to set the baseline for protection. Your personal driving history and statistical information on the safety of the roads in your area also come into play. An auto insurance broker’s own history and business expenses may also factor into your car insurance quotes. Some companies may be similar in price, while other auto insurance brokers may be at opposite ends of the spectrum. That’s why all drivers need to do their research, shop around, and pay attention to the details to find an auto insurance plan that works for them.

Risk Assessment

The number one reason why car insurance rates vary from company to company is that each organization will use a different formula to assess your risk and calculate the overall cost of your insurance coverage. Every insurance company has a unique formula that incorporates several variables, including the risks associated with you driving and owning a vehicle, an estimate of how much money would be needed to cover all claims for an entire year, and insurer operating costs. If you take a look at auto insurance rates from big-name companies across the country, you will see a big range in prices, and that’s due to these specialized formulas.

Auto insurance policy

Your Assessment

When an auto insurance company goes to assess your risk before giving you a quote, there are a few key things they will take into consideration, such as your age, location, driving record, and claims history. Other factors include your vehicle’s make and model, where you store your car, and credit rating. For example, if you keep your car in an attached garage in the suburbs, there’s less risk than if you park your car on a crowded city street every night.

Deciding Your Risk Level

Auto insurance companies will look into your demographics and driving history, and also use statistics and market research to get a gauge of how likely you and similar drivers would be to file claims. These companies keep an eye on accident numbers and traffic conditions in the area so that they can evaluate how risky it is for you to get into your car and drive off every day. Insurance companies may group you alongside drivers with a similar background, such as age, occupation, and driving experience. If you’re placed into a group that’s labeled low risk, you can expect to pay much less than drivers who fall into the high-risk category. Someone with a history of collisions or careless driving would be deemed high risk.

If you’re ready to compare quotes for car insurance in San Diego, CA, contact the trusted auto insurance brokers at California Brokerage Associates today.