How Risk Assessments Impact Your Car Insurance Price

Brunette woman on phone after fender bender

Auto insurance companies use a variety of methods to determine how much to charge you for auto coverage. Some of the factors they look at are things you can’t control, like your age and gender. On the other hand, there are plenty of variables that you can impact through behavioral changes, purchasing decisions and more.

The total sum of what car insurance companies use to determine your pricing is known as an auto insurance risk assessment. Let’s look at what a risk assessment entails and how you can influence the outcome to help get better auto insurance rates.

What is an auto insurance risk assessment?

An auto insurance risk assessment is the process by which a car insurance company determines your likelihood of filing a claim against your policy. The risk analysts weigh policyholder factors against data algorithms that are used by actuaries, underwriters and lawyers. At the end of the day, insurers use these tools to calculate bottom-line numbers to determine risk.

Not all insurance companies value certain risk indicators the same way, which means you may be able to find lower prices on auto coverage by shopping with an insurance company that places less credence on those factors. SelectQuote can help streamline this process by shopping several insurance companies at once on your behalf.

How do insurance companies determine risk?

Car insurance companies weigh several pieces of information they know about you against demographic data. Statistically speaking, if you fall under a certain segment of the population that tends to be involved in more auto accidents, your rates may be higher based on this information.

Factors that Impact Your Risk Assessment

An auto insurance risk assessment typically involves and is impacted by the following details:

  1. Driving record: Your driving record is one of the most important pieces of information an auto insurance company has to determine the risk of insuring you. If you’re a known habitual traffic offender, the insurance company may charge you higher premiums and could even decline you outright.
  2. Age and driving experience: Experienced drivers tend to be involved in fewer auto accidents than those without that history under their belt. Mature driving characteristics include courtesy and following the rules of the road. Senior drivers—to a point—often log fewer driving miles.
  3. Gender: More frequent and more serious auto collisions tend to involve male drivers versus women drivers. In many cases, men are involved in more alcohol-related accidents. These factors lead to thousands of dollars more in insurance premiums for men over the course of a lifetime.
  4. Credit rating: By managing your money and keeping your debt down, you can positively impact your insurance premiums. Good credit ratings can lead to lower insurance costs and represent a lower degree of risk for your insurance company.
  5. Location: Where you live can impact your insurance premiums. Cities represent higher levels of theft and accidents, so people who live there often pay more for their auto insurance. Street parking can also impact your rates, especially compared to vehicles that are stored in a secure garage.
  6. Your commute: Drivers who place more miles on their vehicles are at an inherent risk for accidents. If you only drive a vehicle occasionally, consider asking about “pleasure-use” rates. These rates could also apply if you no longer commute to an office and work from your home.
  7. Vehicle safety features: Cars with airbags, ABS systems and stability control often allow you to pay lower insurance premiums.
  8. Make and model of your car: Popular or expensive vehicles often have higher insurance premiums. As your car ages, you’ll likely see decreases in the cost of insurance (provided other factors don’t change).
  9. The type of insurance you’ve purchased: It seems like a no-brainer, but insurance premiums are also determined by the type and amount of insurance coverage you purchase. Minimum legal coverage will generally be priced lower than full coverage, and policy add-ons such as towing, roadside assist and full vehicle replacement will ultimately add more to the bottom line.

Factors that Don’t Impact Your Risk Assessment

With so many factors impacting the price of insurance, you’re probably wondering what doesn’t play a role in determining your rates.

Unlike life insurance, your occupation, hobbies and health information don’t come into play when auto insurance companies decide what to charge you for coverage.

What You Can Do to Lower Your Car Insurance Rates

Most of the steps you can take to lower your auto insurance rates are simple and well under your control. Before you settle on an auto insurance policy, consider doing the following:

  • Shopping around: Every company prices its policies differently, and you might be able to save money by switching insurance providers. Each year, take some time to explore your coverage options and see if you can find a better deal. Want to make this easier? Let SelectQuote do the shopping for you!
  • Raise your deductible: The amount of money you’re responsible for paying after an auto insurance claim is your deductible. Drivers who avoid accidents might be able to save money on auto insurance by raising their deductible. By increasing your deductible, you can lower your monthly premiums. Just be sure that you can cover the costs of any repairs out-of-pocket up to that deductible dollar amount.
  • Take a defensive driving course: Proactively showing that you’re committed to safe driving can help lower your rates. Defensive driving courses that are state-approved have the added benefit of often reducing points accumulated on your driving record.
  • Download a safe driving app: Auto insurance companies love data, and if you’re a safe driver you can help provide it by downloading a mobile phone app that tracks your driving habits. 
  • Ask for discounts: Insurance companies offer no shortage of discounts for a variety of reasons, whether it’s safe driving, being a new customer, buying a car with safety features, or even combining or bundling home and auto insurance together. SelectQuote customers save $757* on average per year when they bundle their home and auto insurance policies.

*Average customer who bundles savings based on an average of new SelectQuote Auto & Home Insurance policyholders between 1/9/2020 and 1/10/2021. Individual savings may vary, and are not guaranteed. Coverages and discounts subject to state availability and individual eligibility.

Let Us Help Make Sure You’re Getting the Lowest Rate Available to You

Need help finding affordable auto insurance? SelectQuote can help. Our team knows the ins and outs of insurance risk assessment and can find you coverage, even if you’re a high-risk driver. 

We compare rates from dozens of car insurance companies at once to find you the best available rates and discounts. Whether you’re shopping for the lowest price or the most protection, we’ll find a policy that works for you. 

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