How is auto insurance rate calculated?

Your kid starts dating, and it looks like it might be serious.  But you don't know this person.  You trust your kid, but you are curious so you ask: where do you go to school, what do you do, what do you want to do, where are you from, where are your parents from, what do your folks do for work, do you have any brothers and sisters, how did you two meet...?  You do this because you worry and you want the best for your kid, and you think that more information and more historical data the better, because this will help you know the person and it will help you predict their future actions/choices.  And while most of this information and historical data will not affect the relationship between your kid and this person, you ask anyway, because you feel that more information= an educated guess instead of just a guess.

Well, insurance companies go through the similar process when determining your auto insurance rate, and there are two major things  insurance companies really care for: probability of future losses, and paying behavior.  Many factors are taken into consideration, some obvious but some might surprise you.

•           Age
•           Sex-female drivers receive more favorable rate compare to male drivers
•           Marital Status-married drivers receive lower rate
•           Driving violations
•           Whether you rent or own-if you own you will get a better rate
•           Accidents
•           Severity of accidents
•           Frequency of accidents- having ten small accidents that amount to total insurance payout of $10,000 is worse than having one $10,000 accident
•           Education- higher education=lower rate
•           Occupation
•           Type of vehicle you drive- new car vs. old car, expensive car vs. what I drive
•           Physical location- insurance companies divide states into many territories and they use statistical data, like crime rate, traffic info, etc. to determine the risk levels associated with your physical location.  So, even if you stay in the same zip, and only move a mile down the road, your premium can and probably will change
•           Type of coverage
•           Amount of coverage
•           Prior insurance
•           Prior limits
•           Gaps in coverage
•           Insurance score