If you’ve ever searched the Internet for car insurance rates then you know how different the quotes can be from one company to another. One car insurance company might quote you at $150 a month, while another will have you at $350 per month.
For the average driver, this discrepancy in car insurance rates can be confusing and downright frustrating. Nothing has changed about your statistics, driving habits or age, but each company gives you a different quote. So why is it that car insurance rates change from company to company?
Here’s a look at some of the basic reasons insurance companies charge different rates for the same driver.
Differing Risk Factors
Drivers assume that all car insurance companies have the same qualifications for what makes a driver an “at risk” driver, but that isn’t true. Some insurance companies consider being in just one accident places you as an at risk driver, while other companies might have it at two or three accidents in a certain time span.
These differing risk factors cause different companies to give different quotes because one driver might be viewed as “at risk” by one company, but viewed as an average driver the next. No one knows exactly why one company views certain drivers as “at risk” but it could be a result of the statistics they use to assess who is and isn’t a risk while driving.
Discount Programs
Some insurance companies will offer some great discounts to certain drivers. Discounts can be given for being a safe driver, driving certain types of cars, driving for a certain period of time, taking safety courses, getting good grades, or being a part of an organization or company. While it might not seem as if these discounts would make a difference, they can really lower your car insurance rates if you qualify for multiple discounts.
Overhead Costs
Sometimes the cost of your car insurance rates really has nothing to do with what type of driver you are and instead is higher because the company has more overhead to cover. Companies that send holiday gifts, offer a wide range of services, and send statements in the mail might charge more in order to cover the overhead costs of offering such a service. Companies that eliminate these unnecessary expenses can charge less because they have less overhead they need to cover.
Car insurance rates will always vary from company to company. This can make finding the cheapest car insurance quote difficult and frustrating. However, by educating yourself on some of the reasons car insurance quotes differ you can prepare yourself for the quote you’ll receive and help yourself find the company that will offer you the best rate possible.