As a car owner, you have a legal obligation to purchase insurance for your car. Car insurance protects you from the financial losses that may arise if the car is involved in an accident, but it costs money. 

Before purchasing your vehicle insurance, you might want to know how auto insurance companies determine how much you should pay for car insurance. That way, you can better understand why your car insurance premiums are higher or lower than other drivers that you may know.

Here are some primary factors that can affect your auto insurance rates. 

The Type And Age Of Your Car

Not all cars are created equal. As a result, the insurance rates for all cars cannot be the same.

For example, a brand-new car costs more to insure than an older model because of the higher cost to repair or replace it in the event of collision damage. Likewise, expect to pay higher premiums for a luxury car than for a standard car.

The higher the current value of your car, the higher your insurance rates will be, depending on the vehicle model and year.

Your Driving Experience And Record

How long have you been driving and what's your safety record? Having many years of experience as a driver under your belt can help lower your car insurance rates, but it's your safety record that really matters.

If you've caused and have been involved in a few to zero accidents as a driver, the higher your chances of getting low rates. Every auto insurer loves a careful driver because it helps keep their financial risk exposures to a minimum.

Your Residence

Where you live can also impact your car insurance cost. Some areas experience higher auto accident rates than others. As a result, auto insurance companies may categorize drivers from these areas as high-risk clients.

If you live in an area that records a high number of car collisions yearly, you may be required to pay expensive rates for your auto insurance coverage.

Auto insurance rates can vary widely from company to company because each has its own proprietary way of evaluating risk and determining the price of your car insurance. The best way to ensure you're paying a competitive price for your auto insurance is to request and compare quotes from multiple companies. 

Get in touch with an auto insurance company today to discuss your needs and get your free, no-obligation quote.