Americans don’t know what determines their car insurance quotes

Americans don't know what determines their car insurance quotes

Many Americans are unsure of how their car insurance quotes are generated, according to one recent report – putting them in an unattractive position if they hope to find lower costs in the future.

It goes the other way, too – more than half of all Americans are unaware that gender and marital status can have a major effect on car insurance premiums. For example, the news outlet noted that a 20-year-old man's insurance rates are probably about 25 percent higher than a 20-year-old woman's. There are factors that Americans are aware of, however: 88 percent of respondents volunteered that they know age is a factor in setting car insurance rates, and 84 percent know that the make and model of their car plays an integral role in setting their rates, too.

Carole Walker, executive director of the Rocky Mountain Insurance Information Association, an insurance education and advocacy organization, explained that many risk factors have become more integral to setting rates in recent years because insurance companies can calculate the chance of risk on a far more meticulous scale than they could have in past decades.

"There are more different risk factors than there were a decade ago because insurance companies have gotten more sophisticated at determining risk," Walker explained. 

The report then went on to detail the seven factors that insurers typically consider when setting car insurance rates: age, gender, credit history, marital status, place of residence, make and model of car, and your education.

"All these factors are based on actual claims experience," said Jeanne Salvatore, senior vice president and chief communications officer for the Insurance Information Institute.

Experts offer tips on keeping rates low
Another recent report, from Fox Business, detailed how Americans can save money on their car insurance policies. The number one tip offered by that news outlet: Americans need to consider many different auto insurance providers before selecting who they'll register a policy with, because not all insurance providers are up to the task.

"When shopping for insurance, it is important to be consistent in comparing the amount and type of insurance you are purchasing," Lorretta Worters, a spokeswoman for the Insurance Information Institute, told Fox Business. "Your final selection should be based on price, coverage, special service and your overall comfort level with the company or person who will be providing the auto insurance for you."

The report then went on to detail other ways that Americans can lower their auto insurance policies. It suggested that consumers consider high deductible plans, bundling their auto insurance with other insurance policies, and other tactics that can help Americans to get their premiums to a lower level than ever before.