How Are Auto Insurance Quotes Determined?

Auto insurance is in many ways, for everyone involved, a gamble.

• • Drivers are gambling they will ultimately pay less money than they will receive in the case of an accident to work the numbers in their favor.
• • Insurance providers do their best to make sure they ultimately profit from the system by receiving more money from premiums every year than they pay out in claims.

Even if the number's don't ultimately work out in their favor drivers still benefit from knowing their insurance will prevent them from receiving any unexpected and potentially debilitating financial hits in the case of an accident.

Insurance agencies, on the other hand, will only benefit from the system when it works out in their favor more often than not. To ensure this favorable arrangement they rely heavily on statistical data to make sure they end up profiting from the majority of their policies.

What Statistics Do Insurance Companies Factor into Quotes?

The algorithms insurance providers use to determine your actual premiums are very, very complicated and utilize a huge range of data to provide as accurate a prediction of your risk as possible.

Conversely auto insurance quotes are nothing more than estimates and as such require a much smaller range of data to determine your likely premium. Some points of data auto insurance companies, and our site, utilize to determine auto insurance quotes includes:

• • Your previous driving record.
• • Where you live and where you drive to.
• • Your age.
• • Your gender.
• • The car you drive, specifically its make, model, year and VIN.

The main bulk of information auto insurance companies look at correlate with two larger sets of metrics.

• • Driver demographics. The likelihood YOU will get into an accident.
• • Location and accident frequency. The likelihood there will be an accident on the streets you drive on which you could become involved in.

While insurance companies would likely prefer to utilize every single piece of demographics and location data they can get their hands on to determine their auto insurance quotes there are certain pieces of data they legally can't utilize, such as race, due to the fact using these metrics would constitute discrimination.

Getting the Best Auto Insurance Quote

Unfortunately there aren't many factors you can change to reduce your auto insurance quote. You can't change your age, your gender, you past driving experience, where you live and work, etc. Your best bet to find the lowest auto insurance quote possible is by using a comparison service, like ours, to find who will best serve you after factoring in all your important and unchanging metrics.