Factors That Impact Auto Insurance Premiums

Many people face rising auto insurance premiums each year without knowing how to stop the increases. There are a number of factors that can adversely impact the premiums that are paid for auto insurance. Knowing these factors and managing them can make a big difference when it comes time for your policy renewal.

The make and model of your car has a big impact on your premiums. In many cases, more expensive cars are more expensive to insure. This is because replacement parts and labor are more expensive. Safer cars, even if they are larger, can reduce premiums, because drivers and passengers have a lower likelihood of dying or becoming seriously injured in these cars.

Personal driving history has a dramatic effect on ones premiums. Accidents can and often do increase your premiums, and too many accidents can result in non-renewal of a policy. Traffic tickets not only cost you money when incurred, but they are tracked by the insurance companies. Drivers that get tickets are considered to be a higher risk and cost more to insure.

In most cases, cars become cheaper to insure as they get older. At a certain point, the replacement value of an older car is low enough that collision coverage is not needed, as the premiums would be more than the cost of buying an identical car of the same age.

The number of miles driven over a year is a question that insurers ask about. This is because a car that sits in the driveway has a much lower risk of getting into an accident than a car that is in traffic. People who work at home and only drive for leisure will save a lot more than people who commute twenty or thirty miles or more each day.

Similarly, a car owner who lives in a rural area will have lower premiums than one who lives in a high traffic urban area. This is due not only to increased risk of accidents in urban areas, but also because of higher auto theft rates in urban areas. Some people in urban areas incur a very high cost of transportation, including parking garage fees, and some of them decide to rely entirely on public transportation.

A driver’s age is another factor in setting rates. Younger drivers are more expensive to insure, as they tend to be in more accidents than older drivers. Older drivers are safer and more experienced drivers in most cases. These higher rates can be offset somewhat by having all drivers in a household on the same insurance policy, thus incurring a multiple driver discount.

Every driver needs insurance, but hopes to never need to use the insurance coverage. Taking the time to understand the factors that drive increases in auto insurance premiums can help the consumer to save a great deal of money on insurance.

Understanding Why Auto Insurance Premiums Are Very Costly

These days, we’re all complaining about the high cost of living. It appears as if anyone who owns and operates an automobile is hit by a good dose of bills that require struggling with: the cost of purchasing the car, fuel costs, maintenance and repair costs – and the super BIG ONE – auto insurance premiums.

If you haven’t yet verbalized it, no doubt the glaring question is underscored in your mind: Why does car (read car, truck, motorcycle, RV and so on) insurance have to be so very, very expensive?!

The answer to anything related to insurance comes from the industry itself and this is no exception.

“Insurance rates differ from person to person and are based on a few factors,” says a noted specialist working in the Tri-State area and employed by an independent agency. “It all boils down to how much of a risk you as a driver may be.”

Eight Factors that May Affect Your Auto Insurance Bill

Some of the things that determine how much you pay for auto insurance are listed below.

• What Type of Vehicle you Drive

There is a clear difference between makes and models of cars in regard to safety. Moreover, higher-end cars attached to a bigger price tag are more attractive to car thieves and are more expensive to replace; they are also more expensive to fix after an accident.

• Your Address

If you live in a place that has a higher crime rate, your premium will reflect the risk of theft. If you locality has proportionately more auto accidents and submitted claims, it will have an effect on your premium as well.

• How You Use Your Car

If you use your car for the commute to and from the workplace or use it for business purposes, you’ll find that you will have a higher premium than those that drive just to go to the grocer or for leisure trips.

• If You Are a Good Driver

If you never have gotten a driving ticket or never been an accident, you will have a lower insurance rate than those who have a less pristine driving record.

• Your Claims Record

If you have previously filed insurance claims, especially if they have resulted in big payouts, your insurance premium will reflect that. But you may also find a rate increase if you have only filed claims in regard to accidents where you are not at fault.

• How Old You Are

Young drivers, especially boys in the teen years, are grouped together as riskier drivers because the statistics say they display poor driving habits and are involved in and cause many more serious accidents than older drivers. To a lesser degree, those sixty-five and older may find their insurance rates up due to age matters that contribute to poorer reflexes, eyesight issues and more.

• Marriage Status

Studies show that husbands and wives are not involved in as many collisions as those who are not married.

• How Your Credit Rates

Though this may not seem fair to some, insurance companies may class you as a driving risk due to your poor credit score.

Speaking to a knowledgeable specialist employed by an independent insurance agency will help you navigate through the web of insurance policies so that you are presented with the most tailored one at the most competitive price.