You’ve just finished a conversation with a friend and are fuming that your auto insurance is so much higher. While that’s legitimate, more goes into figuring out rates than most people realize. When it comes to determining how to charge a client, insurance companies rely on one denominator to determine price: risk. This isn’t something that an insurance company determines by punching facts into a computer. They calculate risk over time to determine what age groups, types or drivers, and types of vehicles lead to the most accidents. Most insurance companies consider three things when they calculate your risk.

Insurance companies look at age to determine a basis for maturity and driving ability. Adults between 25 and 45 are much less likely to get in an accident than a distracted teen or an elderly driver. Teens are less mature, have less driving experience, and are more easily distracted than people over 25. As people age, they may lose the ability to react in a driving situation. Some people experience deteriorating eye sight. 

Another consideration is your driving history. If your record shows violation after violation, an insurance company is going to assume you are more of a risk than a person with a clean driving record. Most violations fall off driving histories after a few years, so wait a couple of years and ask for a policy re-evaluation. In the meantime, if you get another ticket, consult a lawyer about keeping it off your record.

The third factors it the type of vehicle you drive. This affects policy price in two ways. Expensive, opulent cars are the target of auto theft and are more costly to repair. Statistically, drivers with some faster makes and models are more likely to have an accident, creating higher risk. If you want to lower your insurance rate, see what you can do to lower your risk.