How Are Auto Insurance Rates Calculated?

There is a different base rate for each type of car and geographical area. While individual companies may differ in the amounts they assess for each factor, the major rating factors are fairly universal. These factors are as follows:

Your age.
Statistics show that, as a group, drivers under age 30 have more accidents per mile driven than the general population. Thus, young drivers are charged higher rates, as are families with young drivers in the household.
Your gender.
Young men are involved in more accidents per miles driven than any other population group. The difference is especially pronounced for male drivers under 30. Washington law allows insurance companies to charge on the basis of gender and age where the actual proof of differences in risk exists.
Your car.
As a rule, the more expensive your car, the more you will pay. Because sports cars and high performance cars are involved in proportionately more accidents, cost more to repair and are more likely to be stolen, they cost more to insure.
Your location
The higher number of accidents in a more heavily populated area raises both liability and collision premiums. The law allows a company to calculate your rate based upon your address, even though you may drive to a more urban or rural area. It is anticipated that most miles driven are within a certain radius of the home address.
Driving patterns
The more you use your car the higher your rates. A car used to commute 15 or more miles to and from work has an increased risk of being involved in an accident, than one that is driven for pleasure use, not on a daily basis.
Your driving record and claims history
Most companies apply a surcharge to drivers who have been involved in an accident or convicted of multiple traffic violations. Also, the more claims you have made, the higher your rates are likely to be.

Other Montana Insurance FAQs

Q: What Is An Agent?
A: An agent is a licensed representative of an insurance company who solicits, negotiates, or effects contracts of insurance and provides service to the policyholder for … More
Q: What Is An Application?
A: An application is a signed statement of facts requested by the insurance company on the basis of which the company decides whether or not to issue the coverage. The … More
Q: What Is An Assignment?
A: An assignment is the signed authorization by the policyholder for the insurance company to pay benefits directly to the hospital, doctor, or other provider.
Q: What Is A Beneficiary?
A: A beneficiary is the person designated or provided for by the policy terms to receive the proceeds upon the death of the insured.
Q: What Are Benefits?
A: Benefits are the dollar amount payable by the insurance company to the claimant, assignee, or beneficiary under the policy.
Q: What Is A Claim?
A: A claim is a demand to the insurance company for payment of benefits under the insurance contract.
Q: What Is Cobra?
A: COBRA is a federal law that regulates group health insurance. If you lose your job and you worked for an employer who has more than 20 employees, you may be able to … More
Q: Can I Be Denied Group Coverage In Montana?
A: Coverage under your group health plan (if your employer offers one) cannot be denied or limited, nor can you be required to pay more because of your health status. … More
Q: Can I Be Denied Group Coverage If I Am Sick At The Beginning Of The Coverage Period?
A: All group health plans in Montana must limit exclusion of preexisting conditions. There are rules about what counts as a preexisting condition and how long you must … More
Q: Can I Be Forced To Wait For My Group Coverage To Begin?
A: Yes. This is called the preenrollment period, usually between 3090 days. These waiting periods, however, cannot vary due to your health status. However, if … More