Car insurance companies use multiple factors to determine rates. You may find yourself wondering why your friend’s auto insurance rates are cheaper than yours even though you have a similar car and a similar driving record.

The reason behind that can be a because of a few commonly unknown factors that are used to determine rates. Although someone can have the same car and also have no violations on their driving record, some factors such as zip code and marital status may be the factor behind lower rates. Your home may be bordering city boundaries, and if a home across the street falls into a different zip code, your insurance rates can vary. Same goes for a married driver. Being married often results in lower insurance rates due to claims statistics.

Car insurance companies can look at their total claims and categorize them based on marriage, zip code and multiple other factors such as driving record, driving experience and a few other factors. As a result, companies can lower rates for categories with a lower claims ratio and raise rates for categories with higher claims ratio. An example follows:

Example 1)

Out of those accidents 100% of total accidents, 25% were married and 75% were single.

Result= Lower rates for married drivers and raise rates for single drivers.

Example 2)

Out of 100% of total accidents, 6% of total accidents were in zip code 90027, 0% of total accidents were zip code 92335.

Result= Lower rates for zip code 92335 and raise rates for zip code 90027.

Car insurance companies cannot raise rates any time they wish. Companies must submit a rate change request along with documentation to their controlling government agency such as the Department of Insurance. Rate changes are then approved or denied.

Some of the factors used in determining auto insurance rates can be:

• Zip Code

• Prior Insurance (possible discount)

• Date of Birth and Driving Experience

• Marital Status

• Gender (male or female)

• Driving History (violations and accidents)

• Occupation (vehicle use)

• Commute Mileage (distance to or during work)

• Vehicle Type and Value (including 2 door, 4door, pickup, van, etc.)

• Coverage Requested_

Some discounts may also be available which will reduce the rates such as:

• College Degree Discounts

• Vehicle Safety Discounts (low jack, homing device)

• Good Student Discounts

• Senior – Mature Driver Discounts

• Safety Course Certificate Discounts

• Multi-Car Discounts

The above are most of the factors used to determine car insurance rates, so next time you obtain your car insurance rates, you will have more of an understanding of how your insurance rates are determined.