Anyone can get auto insurance quotes from a number of ways. The most
popular of ways is by checking online or calling insurance companies
directly. But what makes such a difference between rates from one
company to the next? And is there one company that is considered a cheap
auto insurance company?

The ability to operate competitively in
the free market allows insurance companies to structure their
organization to attract particular companies. There are companies who
cater to the high-risk group knowing they have to get insurance
somewhere. Typically their rates are going to be higher than a company
who will only accept low-risk customers, but their service is just as
needed and necessary.

While insurance companies are completely
regulated by the state, the state doesn’t dictate how they rate, they
only approve it or disapprove it. Otherwise it might as well be
government insurance and everyone would be charged the same with no way
to shop for better rates.

This allows insurance companies to
invent their own ways to rate and charge customers. The sweet spot they
all look for is a way to attract and keep customers. There are three
main considerations all companies look for when calculating rates. Thus,
there is not one single cheap auto insurance company. Rates depend on
many factors including these two main ones:

1.    Rating requirements.

Most
companies have sub-companies under the main umbrella of their
organization, which is why you will see different names for the same
company. There is State Farm Mutual Insurance (a standard company) and
State Farm Mutual Fire Insurance (non-standard). State Farm Mutual is a
cheap auto insurance company for low-risk drivers. State Farm Mutual
Fire might seem like a cheap auto insurance company to someone who has
one or two accidents because of a better rate than the mutual company.

2.    Risk factors.

Insurance
companies design risk factors for consistent results for determining
eligibility and premiums. Surcharges are calculated for each type of
violation and claim, and included with premiums.  

Each company
decides how much risk they are willing to take. They decide what makes
someone ineligible and what they will accept for eligible customers.
That is why one company will not allow more than one moving violation to
get their best rates while another will allow up to two violations.

This
should give you confidence that your insurance company is not making up
your premium amount by some random lottery-style guesstimate. You know
you are being rated equally as others who have the same driving record,
driving experience, and other factors. This also goes to prove that
there is not one cheap auto insurance company. The rates will be based
on a number of factors so some are cheaper than others for the same
person.