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Automobile Insurance FAQ'S
Drivers are grouped according to the level
of risk each one poses—i.e., the amount of loss incurred
by insurers within categories of policyholders. For various
reasons, drivers are categorized by:
-
Sex—Men have more
accidents on the road than women.
-
Age—Drivers under 25
(and, for some insurers, under 30) are considered at
higher risk of having an accident.
-
Marital Status—Married
drivers tend to have fewer accidents than single
drivers.
-
Personal Driving
Record—Years of driving experience, accidents,
speeding tickets and drunk-driving offenses are all
factors in determining how much of a risk you pose as a
motorist.
-
How You Use Your
Vehicle—If you commute by car during rush hours,
you're at greater risk of having an accident than if you
only drive for errands and recreation on the weekends.
Drivers who use their own vehicles for business also are
considered to be at greater risk.
-
Type of Vehicle—The
value, size, weight, age of your vehicle, even the cost
of replacement parts, are essential to determining the
price of your insurance. Larger, heavier vehicles are
considered at lower risk than smaller, lighter ones.
Plus, more expensive cars are costlier to have repaired
than economy models.
The cost of your
insurance policy is based on the average cost of covering
actual losses, spread out over your particular "rating
group" as a whole. Of course, you may never have an
accident or have your car stolen, and therefore will never
need to be compensated. But others in your category may not
be so lucky. Your premium will help to pay for their losses,
just as their premiums would help to pay for yours.
For example, if
you are a 23-year-old man and you park your new sports car
on a downtown street in a large city, you will likely pay
more for insurance than a 37-year-old woman who parks her
four-wheel-drive in the suburbs, simply because, based on
average losses, you have a greater chance of having an
accident or being the victim of auto theft.
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