Auto insurance rates for drivers differ, depending on the state, the insurer and the policyholder. Insurance companies consider several factors to decide whether or not to issue a policy to a customer, and at what rates. One such factor is the possible risk posed by a person to the company. Many people wrongly believe that it is the state that decides insurance rates. In fact, states only regulate rates, while companies have their own rating system that decides rates for individuals. Certain other factors that insurance companies consider while determining rates are as follows.

How Do Companies Determine Auto Insurance Rates?

A person’s driving record reflects his road etiquette and responsibility. If your driving record is free from violations or mishaps, you will probably obtain lower premium. A car’s make and model also determine insurance rates. If you own a sporty or luxury sedan, you will receive an expensive policy quote, since these cars’ ability to achieve great speed makes them prone to accidents. Also, repairing these cars is relatively expensive than ordinary cars.

The frequency of usage of a car is also a deciding factor. Lesser the usage, lesser will be the risk of accidents. Similarly, a car that is theft-prone is also considered high-risk.

If you are under 25 years, it will be difficult to get an affordable auto insurance policy. This is because young drivers are considered high-risk. That is the reason why a typical teenager has to pay higher premium than a 22-year-old. To promote responsible driving in teenagers, parents can sign an exclusion form, which helps create an independent policy for the teenager.

Auto Insurance Rates: Teen Drivers

Here are certain useful tips to avoid paying high premiums.

Putting teenage or young drivers on their parents’ insurance policies may help attract lower insurance premiums.

Achieving good grades at school also helps teen drivers in obtaining affordable auto insurance. Good grades reflect on your ability to deliver responsibilities efficiently.

If possible, do not make claims. For minor repairs, pay out of your own pockets. Not making claims for more than three years will earn you a No Claim Bonus.

Train for defensive driving to save yourself from accidents and increased premiums.

Besides, one can use the internet to find suitable and affordable insurance policies. Visit for free insurance quotes and obtain insurance policies that comply with your state laws.