Nine Factors Affecting Your Car Insurance Premiums
There are at least 9 things that affect your auto insurance premium rates, and knowing what these things are can help drivers create a plan to get better or lower cost on their insurance policy. Let’s review them and any changes that can positively affect a premium.
#1 – Driver’s Age
The age of the driver plays a part in the insurance company deciding how much they will be charging the person to drive. In the beginning, young drivers are heavily penalized for their inexperience on the road and as such will be charged more. Drivers with more experience in driving get lower rates because they have and exercise better thought processes in avoiding accidents. People under the age of 25 years generally pay more for their insurance, so they must patiently wait for time to pass to see large decreases in their insurance cost.
#2 – Driver’s Gender
Men have been statistically proven to take more risks than their female peers. As such, they are charged higher rates for their car insurance. The relation between the two is riskier drivers are involved in more accidents. When an accident occurs, the insurer must pay for the damages and they lose money. To prevent the company from losing too much money, the company charges riskier drivers a higher premium to offset the balance. Men can prove their insurer wrong when they actively keep a clean driving record with no tickets or accident markings.
#3 – Driver’s Marital Status
As biased as it may sound, married drivers pay less for their auto insurance rates per person than their single peers do. Statistics again play a role in this because married people have someone they care deeply for. Because of their care, they are also more concerned and will drive more cautiously while their spouse in present in the vehicle. Many will also drive cautiously even when the spouse isn’t in the vehicle because they don’t want the spouse to need to worry. Another benefit to this is insurance companies will give a discount to multiple drivers on the same policy compared to multiple drivers in a household on separate policies.
#4 – Driver’s Driving History
This factor is one of the bigger influences in determining rates. Providers can tell a lot about how a driver operates a vehicle by their driving history. The number of tickets and accidents present on the record indicate the level of safety that driver exercises while on the roads. A higher level of risk will result in higher premium costs. It is an ongoing effort to keep a spotless driving record, but when it comes time to pay insurance premiums it is worth the effort.
#5 – Driver’s Residential Address
The location of the driver’s home is important because it indirectly notifies the insurer of the crime rates of the town. Any vehicle associated with a city that has a higher crime rate is more likely to be damaged from an accident, vandalism or theft. To offset the possibility of multiple claims being paid out, the insurer will increase the premiums for drivers who reside in a town where crime is more prevalent. Drivers can avoid this increase by living outside of the city in a more suburban area with lower crime rates. Crime rates can be checked out by contacting the local government.
#6 – Vehicle’s Info
The make, model and year of the vehicle to be insured affects the premium mostly because this information will reflect the actual cash value of the vehicle. When a car has a higher cash value, it becomes more expensive to insure. The cash value of cars declines as they get older and then become less expensive to insure. When certain coverage is purchased, the insurer agrees to repair to complete restoration or completely replace the vehicle up to the amount purchased. An expensive car is expensive to fix or replace, so the insurer must be smart and charge higher premiums. On the other hand, there are discounts given when your vehicle has safety features, which will lower your cost.
#7 – Usage Of The Vehicle
A provider will also use the primary usage of the vehicle to determine the driver’s premiums. If a car is used primarily as transportation to and from work or school, the insurer knows that car will be driven often and the chances of it being involved in a traffic collision or other damaging circumstance are higher. Cars that are only driven for leisure are on the road less often and chances of it being involved in a traffic incident are slim. Again, the higher the risk of involvement in a traffic collision, the higher the premium cost will be.
#8 – Annual Mileage
In addition to the primary usage of the vehicle, the insurer will need to know the estimated annual mileage of the vehicle. This can be figured out when the driver gets an average of the number of miles he or she has driven the car over a certain number of years. The annual mileage coupled with the usage of the vehicle gives the insurer a clear idea of the level of risk of its involvement in an accident.
#9 – Type of Coverage Purchased
The monetary amount of coverage a driver purchases and the types of coverage purchased greatly affects a driver’s rates. The driver must carry the state’s minimum requirements, which will definitely get that policyholder the lowest rates in the state, but it’s typically not recommended by experts. Their recommendation is well above the minimum amount required, with a policy of 100/300/100. It’s also important to figure out whether or not the policyholder and other members would benefit from options such as medical payments or personal injury protection, which isn’t required in all states. Obviously the least amount of coverage purchased will get a cheap rate, but in the end it may not be the wisest decision especially if the total cost of damages exceeds the small amount of insurance the policyholder purchased. Taking advantage of discounts offered by the insurer will help keep rates down.
It’s always in the best interest of the policyholder to compare the rates offered by a number of local insurers. This will help him or her know what’s available and what their policy should cost on average. Also, don’t be afraid to take advantage of these factors and do what you can to lower your rates. It is possible to get quality car insurance rates for a low price, as well as a car insurance quote!