6 Factors Used By Auto Insurers to Calculate Risk

When you buy car insurance, your insurance company will take into consideration many different factors to determine your risk and the amount of your monthly premiums. Knowing what they consider and why will help you understand your insurance premiums and why they tend to fluctuate over time. If you know how risk is calculated, it will give you some ideas on how to possibly reduce your risk and pay lower premiums.


Your car is one of the biggest factors. If it is new and still carries a lien, you will need to have comprehensive coverage. If it is older and not worth repairing after an accident, then a PL/PD policy may be your best option. The value of your vehicle is closely looked at as well. The higher your car’s value, the more your premiums will be unless you choose to pay a higher deductible.


Many insurance companies look closely at your credit score. They want to find out if you make payments on time and whether or not you have delinquent accounts. This type of information goes a long way in showing responsibility and how you prioritize your financial obligations. Taking a little time to pay off old debts and lower your credit to income ratio will help to lower your premiums. While credit does play a role, it isn’t usually a determining factor for insurability.

Driving Record

A history of costly accidents can result in higher premiums. If you are one of those drivers who is prone to accidents, you can expect to pay higher premiums than other drivers with a cleaner driving record. This is because accidents can be an expensive affair for the insurer especially when it results in major injuries or property damages.


Younger drivers are often hit with higher premiums because they have less experience behind the wheel. Good students, however, can lower their risk by putting in the extra effort to get the best possible grades. Good grades show more responsibility and good judgment when it comes to making wise decisions. As a person ages, their premiums may also go up. Elderly individuals may have no issues whatsoever when driving, but some may have to deal with deteriorating eyesight, a delayed reaction time, and other factors that have an impact on their driving abilities.

Marital Status

Your marital status is also a big factor when determining auto insurance risk. Married couples often get lower premiums because they carry more responsibility due to their family obligations. Parents will often try to be more vigilant when they have their children in the car with them. Single people can receive lower premiums as well if they maintain a good driving record and have few to no citations.

Payment History

Auto insurance companies also consider your payment history while determining your risks. If you have a history of failed/delayed payment of premiums with your previous insurance company, chances are that your current insurer will charge higher rates of premium to cover the increased risks.

If you are interested in finding out more about how your premiums are calculated for your auto insurance, talk to the team of professionals at Sausman Insurance Agency. We serve Mifflintown, Millersburg, and beyond with quality policies.