The Logic Behind Auto Insurance Quotes

We all want affordable auto insurance quotes, but sometimes it seems that the setting of auto insurance premiums are arbitrary and capricious. But there really is more method than madness to setting premiums and online auto insurance quotes. So, why does auto insurance cost what it costs?

All insurance involves spreading risk from an individual or entity to a larger group of investors and underwriters. The premium you will pay compensates the auto insurance company for agreeing to bear the risk of making good on an auto insurance claim, and the risk is assessed by all the contributing factors in your life that may make you a more or less risky person to insure.

This personal risk assessment isn’t arbitrary or random. Mathematical models are developed from a variety of datasets that predict the likelihood of a specific insurance coverage event to occur again. The table, derived from mathematical modeling or actuarial science, which shows the likelihood of an event occurring is commonly referred to as an actuarial table.

Armed with actuarial tables, auto insurance companies can scientifically calculate their level of risk. When they issue you an auto insurance quote and ultimately a policy, they’re betting the odds that the worst won’t happen to you (or your car, property, business, health, etc.), in which case they’ll never have to pay a claim against your insurance policy. In the meantime, they collect your auto insurance premium and invest them in other financial vehicles, so that if the worst should happen, the premium plus the interest they’ve earned from investing your premiums will more than cover the cost of making good on your auto insurance claim.

Many factors and variables play a role in calculating your risk as potential holder of an auto insurance policy. Some of them, such as your driving record (think DUI’s, fender-benders, emotionally charged or reckless driving behavior,) you can control; and some of it you have no control over, such as your age. Simply put, you may be the most responsible 17-year-old driver on the planet, but the auto insurance statistics work against you as the average cost of car insurance for a 17-year-old teenager can be high. Being responsible and older with more driving experience will mean a cheaper auto insurance quote and premium.

Calculations and variables considered for auto insurance quotes and policies constantly change. If you already have automobile liability insurance, you should not wait until its renewal time to shop for a more affordable auto insurance policy. If you find a better rate, you don’t have to wait until your current policy expires to switch auto insurance companies.

Once you purchase the new policy, you can contact your current insurer or agent and cancel your existing policy. You will then be issued a check for that part of the premium that has not been “used.” So, if you have half a year to go on your current policy and you find a better deal on auto insurance now, you can cancel and could get a refund of 50 percent of the premium you’ve paid – there are some exceptions such as policies where the premium is financed so check your policy to be sure.

E-INSURE Services Inc. recommends that you shop for insurance quotes from a variety of different insurance companies to make sure you are getting the best deal.

Don’t forget, shopping for the best available auto insurance quote, you will want to make sure you are comparing apples to apples — make sure you consider more than just the premium. Do the policies have the same limits? Do they have the same coverage? Are the policies issued by reputable insurance companies? Be sure you know the answers to these questions when comparing auto insurance quotes.


EINSURANCE is a one stop shop for insurance quotes comparison. Our writers, researchers, and industry experts all work together to inform consumers about online insurance marketplace. Whether you’re buying your first car insurance policy or finding health insurance for your families, EINSURANCE always provides latest relevant information to your choices.