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Understanding How Your Car Insurance Premium is Calculated (plus Some Ways to Lower Car Insurance Costs)

How insurance rates are calculatedThe world of car insurance is multi-faceted, and if you’re not well versed in the subject, it can be difficult to understand.

One of the most common questions you may ask as you look over the policy is: How is my premium calculated? Though there is no one set of guidelines to follow because all insurance companies have different requirements, we hope this list will help clarify some of the factors that contribute to your rate.

  1. Year, Make, and Model of Your Car: As a rule of thumb, the more expensive the car, the higher the premium.
  2. Mileage: The more you drive or commute for long distances, the higher your premium is likely to be.
  3. Age, Sex, Marital Status: The big standout here are males under the age of 25, as they are considered a risky and inexperienced demographic. In some cases, married couples may pay less.
  4. Where You Live: Getting car insurance within New York can be a completely different experience depending on the area. Generally, due to a higher likelihood of instances of vandalism, theft and accidents, urban areas produce higher rates than their suburban or rural counterparts.
  5. Credit History: Credit is often used as a predictability factor for future habits. The same goes for your car insurance. Credit history is used to indicate and assess potential risk.
  6. Tickets and auto insurance ratesDriving Record: Insurance companies want to know your history behind the wheel. Those with poor driving records (with tickets, accidents, etc.) tend to experience higher rates than those who have had clean driving records for several years. Companies often look back as far as 5-7 years.
  7. Lapse of Insurance: If you have recently had a period where you were uninsured because of a denial, cancellation, or non-renewal, this can affect your rate going forward.
  8. Deductible: Your deductible is the amount of money you are responsible for before your insurance company will pay out on a claim. The more responsibility you take on, the lower the annual rate.
  9. Policy Coverage: Depending on the company, there are normally a variety of coverages offered. The more coverage you buy, the higher the final rate.

 


After all of this, you might be saying, “Ok, but is there anything that can bring my rate down?” The answer is “yes!” Here are some ways to positively affect your premium:

  1. Change your Routine: Join a carpool to work or alternate between driving and public transportation. Lowering usage can lower the premium.
  2. Ask About Discounts: There are discounts offered for safety features on your vehicle; taking advantage of these can lead to cheaper car insurance. Things such as passenger airbags, backup cameras, and blind spot monitoring are all things that can lead to a discount. You may also receive discounts for a good driving record.
  3. Take an Accident Prevention Course or Consider Bundling: Taking an accident prevention course helps prove your commitment to safe driving! You can also “bundle” your auto policy with other types of insurance the company may offer, such as home or life.

 

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The information contained in this document is provided for general informational purposes only. TSC Direct makes no representations of any kind, express or implied, about completeness,, accuracy, reliability, suitability or availability with respect to this article or the information, products, services or related graphics, if any, contained in this article for any purpose. The information is not meant as professional or expert advice, and any reliance you place on such information is therefore strictly at your own risk. Always consult with a licensed insurance professional for insurance coverage information and selection.

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Since 1986, we have offered the most competitive rates in auto and homeowner's insurance in the New York metropolitan area. Why should everything cost more just because we live in the greatest city in the world? Take 2 minutes and get a free quote today.
As of December 31, 2017, Tri-State Consumer Insurance Company, known by its trade name, TSC>Direct, had admitted assets of $104,143,929 and policyholders surplus of $45,194,317. Its total liabilities were $58,949,612 including $42,833,754 in reserves.
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Providing auto and homeowners insurance to: New York City, Queens, Manhattan, Brooklyn, Bronx, Staten Island, and Nassau & Suffolk Counties in Long Island. Providing homeowners insurance also to: Westchester County and Orange County NY.