How are Auto Insurance Rates Computed?
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Why do some car owners pay more or less premiums than others? Each insurer sets its own formula for calculating premiums. A car owner may pay from $500 to $2,000 for an insurance policy with similar coverage. Though the weight placed by individual insurers to each rate indicator varies significantly, there are common factors considered by the industry when computing for auto insurance rates.
Type of vehicle
Insurance premiums are mainly based on the price of a vehicle. Costs of maintenance and repair are also factors. New and more expensive cars may be more expensive to repair or replace, and thus cost more to insure.
