Home » Auto Insurance » Calculating the Risk for Auto Insurance

The road is a dangerous place. Everyday thousands of accidents occur, some of them with lethal consequences. In this busy age that we live in, drivers must rely upon auto insurance to cover any costs of a potential accident on or off the road. That is where a good insurance agency must be contacted.

Each insurance agency has it’s own way of calculating their auto insurance rates. At least five elements are commonly used: a base rate; a driver factor; a vehicle factor; a geography factor and a coverage factor. Some companies use other factors to determine their rates. These factors are combined to determine the final rate that the policy holder will pay for their auto insurance coverage.

Auto InsuranceSo as mentioned earlier, each company has different policies which means insurance rates may vary significantly from agency to agency.

The Driver factor is calculated on the base of the driver’s age, gender, marital status, moving violations and history of accidents.

The Vehicle factor represents how much the company will pay if the car is involved in an accident. It’s mostly based on the vehicle’s cost. It can also represent the probable attitude and habits of the driver. For instance, a kid with a sports car will most likely drive fast and careless, while a family man with a van will probably be calmer.

The Geographic factor is determined by the accident frequency in the selected area. Big urban centers are more likely to be the site of accidents rather than a rural area.

The Coverage factor is based on the total amount of coverage a policy provides. The higher the coverage limit, the higher the protection for the driver. However, a high coverage limit represents higher risk for the insurance agency.

All these factors raise or lower the premium. The base rate is an amount of money that is the same for every policy, and is already set. The base rate is then multiplied by all the used factors, and the result is how much the holder of the policy will pay for auto insurance coverage.

A reputable insurance agency will provide you with the best possible coverage. We at Nationwide Insurance – Barfield Insurance provide insurance policies not only for your car, but for your boat, motorcycle or RV! We are experienced professionals and we do right by our customers. Our headquarters are in Orlando, FL, and you can reach us at (321) 332 -7090.