When you’re shopping for insurance, one of the first things you’ll do is get a quote. But what exactly goes into determining that number? Insurance companies consider a variety of factors when calculating a quote, each of which helps assess the level of risk you pose as a policyholder. Understanding these factors can give you a better idea of what to expect and how you might be able to lower your premium. Let’s break down the key elements that influence an insurance quote. 

1. Location

Where you live plays a significant role in determining your insurance quote. For example, if you’re seeking auto insurance, living in an area with a high rate of car thefts or accidents can result in higher premiums. For homeowners insurance, being in a region prone to natural disasters, like hurricanes or earthquakes, will also affect the cost of your policy. Your location is a strong indicator of the potential risks an insurer might have to cover.

2. Insurance History

Your insurance history gives insurers insight into how you’ve managed risk in the past. If you have a history of making multiple claims, you may be seen as a higher risk, leading to a higher quote. Conversely, if you have a clean record with few or no claims, you might qualify for discounts or lower rates. Insurers value consistency and responsibility, and a solid insurance history often works in your favor.

3. Credit Score

Many insurance companies use your credit score as a factor in determining your insurance quote. Studies have shown a correlation between credit history and the likelihood of filing a claim, so a higher credit score can often lead to lower premiums. If your credit score is low, your premiums might be higher, as insurers may see you as a higher risk. Keeping your credit in good standing can have a positive impact on your insurance costs.

4. Assets and Liabilities

Assets and liabilities are critical in shaping your insurance needs and the corresponding quote. For instance, if you own a valuable home, vehicle, or other significant assets, you’ll likely need more comprehensive coverage to protect them, which could increase your insurance costs. Similarly, your liabilities, such as loans or debts, might require additional coverage to ensure you’re fully protected in the event of a claim.

5. Coverage Amount and Type

The amount and type of coverage you choose directly affects an insurance quote. Higher coverage limits and lower deductibles typically result in higher premiums. For example, if you opt for full coverage auto insurance with a low deductible, your premium will be higher than if you chose a basic liability policy with a high deductible. Additionally, optional coverages, like roadside assistance or personal injury protection, will add to your total cost. 

As you can see, several factors contribute to the calculation of an insurance quote, each of which helps insurers assess risk and determine the appropriate premium for the coverage you need. By understanding these factors, you can better anticipate your insurance costs and make informed decisions about your coverage. 

Are you in the market for auto or homeowners insurance? Dive right into getting a quote on our website or contact us directly. At Safeside, we’re committed to helping you get The Right Insurance at the Right Price. Let us help you strike a balance between coverage and cost, ensuring you’re adequately protected without overpaying.