There are number of factors that determine your auto insurance rates. Understanding the factors can help you to save money on your automotive insurance and get the best deal possible.
Depending on where you live, insurance premiums can be mandated by government.
Alternatively, some jurisdictions allow insurers to set their premiums, though insurance industries are usually very heavily regulated and this helps to enforce minimum customer-service standards to ensure customers are getting a fair deal.
What factors influence premiums?
The task of defining premiums is often left to an actuary, who use a complex range of statistical data to forecast expected future costs of claims. For more information on this, view the following PDF document: http://www.casact.org/library/studynotes/Werner_Modlin_Ratemaking.pdf
Furthermore, it is important to note the regulations governing automotive insurance do vary from country to country and also from state to state within countries.
In Australia, a baseline form of car insurance known as Compulsory Third Party Insurance is required for all drivers;
By law you are required to have compulsory third party (CTP) insurance. This is sometimes known as a green slip. CTP insurance is the most important type of car insurance. It covers death and injury to people if you are involved in an accident. Each state and territory has different rules relating to this type of cover.
Source: https://www.moneysmart.gov.au/managing-your-money/insurance/car-insurance
UK drivers are subjected to similar insurance requirements;
You must have motor insurance to drive your vehicle on UK roads.
Third party insurance is the legal minimum. This means you’re covered if you have an accident causing damage or injury to any other person, vehicle, animal or property. It doesn’t cover any other costs like repair to your own vehicle.
Source: https://www.gov.uk/vehicle-insurance/overview
The insurance landscape in the US is far more complex, with each state having their own set of requirements.
The requirements for auto insurance vary from state to state. Check with your state insurance regulator to learn more about individual requirements, as well as insurers you may be considering for your policy.
Source: http://www.usa.gov/topics/travel/cars/insurance.shtml
Overall, the automotive insurance landscape is very diverse in terms of regulations and the impact of them on insurance premiums. For further information about your jurisdiction, visit the relevant governmental website.