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5 Key Factors That Influence Insurance Rates

Auto insurance rates with IFA Auto are determined primarily using these five key factors. While certainly a person’s individual driving record and other unique elements shape a premium, the 5 factors detailed below remain significant when purchasing cheap auto insurance online. These primary factors include garage location, as defined by population and auto congestion patterns, lawsuits resulting from personal injuries/death, ever-increasing medical costs, rising car repair costs and insurance fraud, driving history, insurance history, and claims data.

Geographic Factors

Whether you live in an urban, suburban or rural area plays a huge role in determining cheap auto insurance premiums. The more densely populated an area, the greater the number of accidents and resultant risks, which translates into higher premiums for everyone. A case in point is New Jersey, the most densely populated state in the U.S. Less populated suburban areas and certainly rural areas typically have far lower insurance rates than metropolitan areas.

Legal Factors

Lawsuits are another factor that increase cheap auto insurance rates. The tort system has affected everyone’s premiums, with a notable increase since the 1980’s. Since Insurance companies are required to pay defense costs for lawsuits, this burden has affected rates across the board. Added to this dynamic are judgments, whether frivolous or legitimate, in the area of ‘pain and suffering’ that have risen in the last 20 years.

Medical Expenses.

With medical costs increasing more than twice the inflation rate over the last two decades, cheap auto insurance rates have certainly been affected. ‘Soft tissue’ injuries, in particular, often result in extended treatment, causing insurance companies to pass on costs to those insured, in part because the financial burden to the insurer continues.

Car Repair Costs

With more sophisticated cars comes greater expense to not only purchase and insure them but also to repair and replace them when damage or loss occurs. Vehicle additions that include enhanced technology such as airbags, fuel injection systems and computer systems, with resultant costs to repair mechanical and technical parts, have dramatically increased.

Insurance Fraud

The National Insurance Crime Bureau calculates that insurance fraud costs property and casualty insurance companies an estimated $20 billion dollars annually. This is equal to 10% of claims paid out in the same category, which clearly costs everyone in higher insurance premiums.