Naturally, vehicle owners want to know their estimated auto insurance cost for a particular car, if they move address, add another driver or get traffic tickets. Every little change in your particulars will result in change in the premium. Knowing these costs will help in decision-making. For example, a teenage driver may go for a more modest car when he/she sees an expensive estimate for a flashy sports car he/she considered first.
It is best to define what is a car insurance calculator, quote or an estimate before we go any further into the post. A calculator discussed here isn’t a tool that answers the question of how much automobile insurance do I need. It would have been a hell of a tool if it could do that for you. Only you can answer such questions because choosing a policy requires answers to what sort of security you want from your policy and how you view risk.
This post looks into proprietary car insurance premium calculators or quote platforms that can tell you how much a particular insurer wants to insure your automobile. A quote should always be viewed as an estimate until you get a few more quotes to compare. Only after a proper comparison you can have a good idea as to how much you need to pay.
For example, if your first quote is $1,500 it means nothing to you until you accept it. If the second quote is only $1,000 it doesn’t take long to forget about the first quote. If the consequent quotes are all over $1,500 this first quote starts grabbing your attention. So, you should always see a quote as a rough estimate because you have no idea if it is cheap or expensive until you have a few more.
Usually a quote is seen as an estimate in most lines of businesses. However, auto insurance calculators or quote tools are so advanced today that they can give you a firm quote. If you think that it is a fair estimate of what you should pay you can accept it without the need to go back and get a firm quote.
A Vehicle Insurance Quote Is Only Binding for the Insurer
A quote is usually valid for a period of time and it is binding for the insurer until that time is over. You can go back the next day and accept it or walk away because getting a quote doesn’t tie you down. Most importantly, the price quoted is only relevant to the carrier. A quote doesn’t tell you anything about a fair premium to insure your car. In fact, it only reflects the view of the insurer and therefore doesn’t have to be fair in anyway. It is your job to figure out what is a fair premium to pay and you can only do that by getting a few more quotations using a few more proprietary estimators.
How Much Is Car Insurance?
Calculators or quote platforms can help in answering this often asked question. There are a few comparison websites like this one that can facilitate quick quotes that can give you a pretty close estimate. They don’t require much information and they offer cheap instant auto insurance quotes online. Why not have a go and see how much you should pay?
There are a few influential factors for a particular driver or car and the answer depends on combination of these factors. It would be fairly cheap to insure a family sedan when the drivers insured have good and long driving histories, owner has a good credit score and they live in a low risk area. Every negative record will raise the cost a bit.
It is only fair that a driver with bad driving record pays a bit more to compensate for the higher risk of getting involved in an accident. Younger motorists will normally face high rates due to lack of experience, too. Cities are known to be higher risk compared to countryside and therefore a city zip code will be detrimental for your wallet.
Principles of Estimating Vehicle Insurance Costs
Premiums are as individual as policyholders. Furthermore, each person would have different circumstances, additional drivers and cars, require different level of coverage and live in a unique zip code. Therefore, it is almost impossible to estimate premiums without filling the form and getting the quote.
Here are a few guidelines as to what to expect in terms of estimated automobile insurance rates and how premium calculations work.
- You can find a cheap full coverage insurance policy with below components. The final premium quote is the total of various rates for various components below.
- physical damages to third party automobiles and property
- injuries to other people caused by the policyholder,
- physical damages to own vehicle
- fire damage,
- storm, rain and other weather related damages,
- theft of insured vehicle
- accidental damages
- consequential losses due to inability to use the vehicle, like rental costs
- Experienced drivers with clean driving records have a much larger pool of insurers to shop around. They are the ones most likely to get the best prices. However, even them should shop around instead of hoping for the best from their current providers.
- Almost all automobile insurers consider younger drivers high risk. They are inexperienced in life and operating a motor vehicle. Both are essential for avoiding an accident and the situations that might lead to one. You can read further on average car insurance rates by age.
- The car you drive is another key factor as they are classified from safe to high risk, just like the drivers. That is why it is important to get insurance estimates before buying a car to make sure it will not cost an arm and a leg to insure.
- Where you live is an important factor. Most calculators are zip code based. They include all the demographic data like number of stolen cars, other crimes, accidents and overall wellbeing of the neighborhood.
- State regulations will affect the rates applied. Companies have to follow the rules and regulations of a state while underwriting policies and paying claims. Living in a state where vehicle insurance rates are high will increase average premiums and every policyholder will be affected from it.
- Generally rates are based on the main driver and owner of the automobile. However, additional drivers usually add to the cost, especially if they are high risk and/or young. In other words, adding or taking off a driver from your policy will increase or decrease your premium.
- Premium estimators don’t work in linear fashion. As you buy more and more coverage your rates start going down. That is why there may not be huge price difference between a full cover and liability only policy although there is substantial difference in the protection provided.
- Certainly, there are “cheap” and “expensive” policies in the sense that they are designed to be that way. A cheap policy may have all the right and necessary modules in place. Nonetheless they will not be as comprehensive as some of the more well thought covers in terms of wording, provision and claim settlement details. In other words, cheap auto insurance policies are designed to do the job without bells and whistles. Keep this in mind when you are going over your options.
- Prices are as individual as anything and all the above factors cause it to change. Therefore, you should let your insurer know of any changes during policy term and check prices again at renewal.
Auto Insurance Quotes Vary Widely Depending on Insurers
Another very important factor is who offers the policy coverage. Insurance isn’t a commodity with a fixed market price. It is in fact a promissory contract where the insurer promises to compensate policyholders for damages and liabilities suffered in return for payment of the premium. That is why you may be justified to pay a little bit more to be insured by an insurer you trust more than others.
Each company has to assess the risks associated with insuring a particular vehicle with agreed drivers. The main ingredient for the success of an insurer is this ability to price the risk. Most companies formulate their rates around historical data and their future outlook. However, few companies would charge an additional premium for their good name and reliability.
It is perfectly normal to see two different companies offer quotes that are $1,000 apart from each other. In other words, which company you apply for a quote will affect the premium tremendously. If you somehow choose one of the most expensive insurer in your state you can easily pay 5 years worth of premium in one year to this company, in comparison to what you would have paid if you shopped around and found a fairly priced provider. That is why it is very important to compare automobile insurance prices before you decide.
It is naive to get one quote and go with it and can turn out to be a costly mistake. The worst part of it is that it can take a few years before you realize you could have saved a lot of money. Large percentage of policyholders keep renewing their policies automatically year after year, having no clue as to how competitive their carriers are.
How Do Car Insurance Calculators Work?
We often come across questions like how much premium a 20 year old driver should pay. You should know that the price would change depending on the company that offers the quote, as explained in detail above. Unfortunately, there isn’t an easy and fair solution to it. Therefore, you may lose out if you just get one quote and that comes from an expensive insurer.
Each insurer has its own proprietary way of calculating premiums for new applicants and current policyholders. These are complicated programs that deal with many aspects of the risks. They are not only smart solutions that can calculate quotes in seconds but also reflect the underlying underwriting view pretty efficiently. That can make companies a world apart from each other in terms of prices. Even more interestingly, the quotes will change substantially when the applicant changes.
For example, quite a few insurers consider credit score to be a key data and they can charge about 20% more or less depending on how good the applicant’s credit score is. And yet there are still number of insurers that care more about traditional risk indicators like driving records, age and experience of applicants and less about the credit score. Now, if you have a good credit score you would probably get cheap rates from the former group of insurers, even if you have a recent claim or speeding ticket. On the other hand, you would probably be penalized heavily by the latter group because of the recent claim and it wouldn’t matter that you have a good credit score.
That is why it is essential that motorists get several quotations first. Then, they should look at the coverage, price and reliability of the insurer and try to figure out which one is fair. Visiting a comparison website with a tool that offers quotes would make this task a lot easier than it sounds. They will help you preview the offers from several carriers and get a firm quote from whichever ones you choose.
A premium may be a simple looking figure in dollars. But this number is determined after careful calculations. Essentially, you will need to provide a few details to know how much is auto insurance for you. You may need to repeat this process several times for each of different providers. However, most of the quote forms take only few minutes that in no time you will have a good idea how much is a fair premium. You can start getting a few quotes using our form above.