Have you ever compared your car insurance rate with a friend or family member and found it wildly different—even if you both use the same insurance company? It's not that your carrier likes one of you better than the other. In fact, the way rates are determined is based on many different factors—some obvious, some you might not expect:
ñ Accident History and Driving Record-- Okay, this one's a given. If you've had many accidents in the past, you're likely to have more in the future, and your insurance rates will be accordingly higher to make up for the risk. The same logic applies if you have a slew of speeding tickets or other traffic violations on your record—higher risk, higher price.
ñ Mileage and Vehicle Usage-- This factor boils down to simple probability: the more you drive, the more likely you are to be in an accident.
ñ Vehicle Make and Model-- This factor tends to surprise a lot of people, but it is an important part of your insurance rate. Some cars are just safer than others, while some tend to crumple if you look at them sideways—which affects risk, and in turn, rates.
ñ Demographics-- Demographic information is a very good predictor of who are the most—and least—safe drivers out there.
ñ Insurance Score-- You probably knew you had a credit score, and that all-important number helps us calculate your insurance score. Believe it or not, there's a strong relationship between how you manage your credit and your likelihood of loss in a car accident, which is why we take it into account when calculating your rates.
We hope this helps shed some light on how auto insurance rates are calculated, but if you're still confused, give us a call. We'll not only help you find a great Erie Insurance rate, we'll also help explain it—and how you can lower your costs.