Before you purchase an insurance premium you may be wondering just how much you should expect to pay. Many people like knowing how much they are potentially looking at. Insurance providers use many underwriting factors to determine your personal premiums, but some factors are more predominate than others. Knowing these factors are key to the average prices of auto insurance.
So what is your premium mainly based on?
The answer is actually very simple. Just like every business owner knows it is all about location, location, location; the same is true when your premium is decided upon. Many wrongly believe that it mostly depends on the type of automobile that you drive, while this is an important aspect it isn’t the main factor.
When you live in an area that is more highly trafficked you are at a higher risk of actually getting into an automobile accident. This is what the insurance company takes into consideration mainly when deciding upon a premium for you.
The more traffic on the road with you, the more potential risk you pose. Insurers don’t give you a policy solely based on how you personally drive,they base it mostly on your location and use of the vehicle.
If you live in a large city like New York and are a heavy user of the vehicle your premiums will be a bit higher that someone who is a less active user. The same is true if you live in a lesser trafficked area like North Dakota. Lesser trafficked areas within the states will have different premium prices. The higher trafficked areas usually drive up the averages for the whole state especially since the averages are based on combination of the different insurance packages.
Individuals who need insurance in New York can expect to pay at least $1,000 dollars on average. While those who live in North Dakota can expect a much lower out of pocket average for insurance, their insurance is going to be about half of what you would pay if you were in New York.
The location risk factor can also be applied to homeowner’s insurance. If the area where you live is more prone to natural disasters your premium will be higher than that of someone who lives in a safer area.
After location is taken into consideration there are other factors which will effect your premium. The other factors are usually based on statistics for your age group, gender,and history most of these factors are company based and can vary greatly between different providers.
While shopping for a policy the average cost is usually the first thing people want to consider. While this is helpful it can only give you a general idea of what to expect. It should not be considered as an accurate quoting method. Make sure you shop around and ask your provider about additional discounts that may be available to you when considering insurance providers and make sure you know what the average cost is in your state. If you live in North Dakota, the average cost of insurance in New York wont do you much good, unless you are planning on relocating.