Auto insurance companies use statistics gathered from various sources to determine the appropriate amount to charge their customers. It is a simple fact that certain people are more likely to become involved in an auto accident. Those with little or no driving experience or who have a history of being cited for moving violations are usually considered high risk when it comes to insurance protection.
Individual drivers control some of these factors. However, the actual location where the insured resides or the area where the car is used can also greatly impact the monthly premium offered by the insurance provider. Some places are known to present a higher risk simply because of the crime rate, the rate of accidents, or the population demographics.
Neighborhood Safety Statistics
Comprehensive insurance prices vary according to the geographical area where the vehicle is parked at night. Some neighborhoods have a high rate of vandalism and theft. A greater than average number of cars are broken into or stolen. This means more claims by insureds.
Comprehensive insurance protection will reimburse the policyholder should his or her car be stolen and never recovered, minus the deductible. Insurance companies do not want to have to pay such claims too often. A good number of the vehicles stolen are worth many thousands of dollars, and insurance providers must charge more if these cars are parked in neighborhoods with a high rate of theft.
Accident Statistics And Traffic Patterns
Insurance actuaries have a busy job determining how certain areas present a hazard for vehicles. The vehicle incident reports gathered over the years often show a clear pattern of certain accidents in a given area because of the traffic patterns. The geographical position of intersections, the number of arterials, time of day when traffic flow is highest, and speed limits posted in the neighborhood all play a role in the frequency and severity of accidents.
A certain percentage of the population drives under the influence of alcohol. T his is an unfortunate fact, one that is not lost on the insurance companies. If a neighborhood contains a large number of nightclubs, taverns or restaurants, chances are the nearby residents will pay more for both liability and collision insurance. The density of cars also plays a significant role in accident rates.
Population Makeup And Insurance Rates
Younger drivers are more likely to be involved in a collision because of their lack of experience and driving habits. Certain neighborhoods have a larger than average number of young drivers. There are neighborhoods that are full of apartment complexes, and these units can tend to be more filled by young adults and college students.
These neighborhoods may experience a higher than expected accident rate simply because of the average resident age. If an insurance provider begins to notice an upward trend in claims filed in a particular urban or suburban area, studies can be undertaken to determine if there is an increase in the number of young adults living there.
Areas near a college or university may also be subject to a higher vehicle incident rate and therefore higher insurance premiums. Any neighborhood that is populated with a higher than average number of teenage or young adult drivers usually is marked as high risk. It is an unfortunate fact that even safe drivers living in the area may be charged a slightly higher amount than they would if residing elsewhere.
It is important to remember that most vehicle owners can positively influence their insurance premiums simply by driving a safe car, avoiding dangerous roads, limiting their driving whenever possible, keeping their insurance policy in force at all times, and not filing claims unless absolutely necessary.