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.

The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.

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