One of the most expensive modern technologies at your disposal is your vehicle. If you’re like many people, you drive it daily and must protect it and its occupants against injury while driving. And if you’re in an accident, you rely on car insurance for financial protection.
However, car insurance can be expensive because many factors determine the amount of your premium. By knowing these factors, you’ll better understand how to keep your premium as low as possible for the amount of insurance you require. Here are the most common things that affect car insurance rates.
# 1 The Type of Car You Own
Your car will factor into your insurance rates. For example, insurance companies compute their premiums based on risk, which means they rate sports cars as higher risk than minivans (though personal preferences do creep in).
The type of car you drive can affect your insurance premiums in various ways. First, there are safety ratings to consider. If a particular vehicle has an alarmingly high number of accidents or injuries, the company will want to charge higher premiums to compensate for those losses.
Additionally, some cars are more expensive to repair than others. For example, some require unique parts or rare skills that not all mechanics possess. So, insurance premiums for these vehicles can be higher.
The type of car you drive may also affect the likelihood of an insurance claim for a stolen car. For example, flashy sports cars with lots of bells and whistles may be stolen more often, resulting in higher insurance premiums for these vehicles.
Finally, insurance companies also consider how often claims are filed yearly for a particular car model. If the same make and model of the car is involved in more accidents than others, it may be considered riskier to insure, leading to higher premiums. So, be aware that when you buy a vehicle, your choice may affect how much you pay for car insurance.
# 2 Where You Live
The state or area where you live also affects your premium, sometimes substantially. Insurance companies pull data about specific locations and use it to calculate risk. Your zip code can have a significant impact on your rate. So even if you’re looking for a new place to live or just trying to save money on car insurance, it’s worth researching the areas where you want to live.
Typically, living in a highly populated area will cost more than living in a rural area because more cars mean more accidents and claims.
In densely populated areas, more cars are on the road at any time of day and night, increasing the likelihood that an accident may occur. Furthermore, car theft is more common in heavily populated areas. Therefore, insurance companies often experience more claims in urban communities, resulting in drivers paying higher premiums for insurance.
# 3 Your Driving Record and Claim History
Having violations or accidents can affect future premiums and coverage. Your driving record is one of the most significant factors in determining your car insurance rate. You can expect to pay less for coverage if you have a clean driving record. The opposite is true if you have a history of traffic violations or accidents on your record.
In general, an accident, especially where you’re at fault, will raise your rates more than a ticket. However, the type of accident and ticket can make a big difference. For example, one DUI (driving under the influence) could mean higher rates than multiple speeding tickets.
In most cases, tickets and accidents stay on your record for three years, though some remain for five years or longer. Some states offer point systems for traffic violations. If you can keep your points below a certain level over time by taking defensive driving courses or avoiding new driving violations, your insurance premium is often lower.
Even if you have a clean driving record, but you have multiple comprehensive claims for things like towing or windshields, these claims will affect your premium. If your record has an excessive amount of these claims, you may not qualify for a policy. Purchasing a Roadside Assistance Plan, like AAA, is helpful to keep these claims off of your insurance history and thus keep your premium down.
# 4 Your Age
A study by Insurance.com suggests drivers under 25 pay double the rates of drivers who are 25 and over. This is because drivers younger than 25 tend to have more accidents and get more speeding tickets. A comparison of the top 50 cities on their list shows they all have higher car insurance rates for drivers under age 25.
Furthermore, car insurance rates tend to go down at age 30 and rise again at 50, then again at age 60, since these drivers are often more likely to need medical care.
Therefore, be aware that your age can affect your car insurance rates.
# 5 Your Credit Score
It’s important to remember that your credit score plays a significant role in how much you’ll pay for car insurance. In general, having a good credit score can save you money, while having a lower credit score can result in higher premiums.
Check your credit score, so you’ll have a better idea of how it could affect your car insurance rates. You may be able to raise your credit score resulting in lower car insurance premiums.
# 6 The Number of Drivers in Your Household
Households with multiple drivers often face higher insurance premiums than those with one driver. Factors resulting in higher car insurance premiums for multi-driver households include:
- Increased risk exposure.
- Diverse driving habits.
- Increased miles driven.
- Additional vehicles insured.
- Policy coverage for a diversity of drivers, such as ages.
It’s important to remember that while some aspects of your life may influence car insurance premiums more than others, each factor contributes in some small way toward the total cost of your policy. Therefore, if you can manage any of the factors without sacrificing your lifestyle, you could easily lower your car insurance premiums.
ABC Dennis Insurance
ABC Dennis Insurance is an independent insurance agency established in 1997 that provides automobile insurance to its customers. If you have not reviewed your insurance coverages this year, please call our office at (813) 949-7765 or email us.
Besides auto insurance, we can help with all your insurance needs. As an independent agency, we find the best insurance coverage with the most competitive rates.