Principles of Risk Management and Insurance, 13th Edition

Cost of Auto Insurance

Auto insurance is expensive. Auto insurers have substantially increased their rates over time because of rising medical costs, higher motor vehicle repair costs, soaring jury awards in motor vehicle liability cases, and insurance fraud and abuse. You should be aware of the factors that determine auto insurance premiums and what you can do to reduce your premiums.

The major rating factors for determining private passenger auto premiums are as follows:

• Territory

• Age, gender, and marital status

• Use of the auto

• Driver education

• Good student discount

• Number and types of cars

• Individual driving record

• Insurance score

Territory

A base rate for liability insurance is first established, determined largely by the territory where ...