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Car Insurance Premium: Top 6 Factors That Impact Price
When comparing quotes for car insurance, it’s important to understand the factors that impact your premium. By understanding these principles you can find a policy that will best match your needs.
It’s important to understand that insurance companies base their offers after they assess their risk. When offering car insurance coverage, higher risk clients means they are more likely to have to pay for an insurance claim in case of accident or damage. Car Insurance companies consider a variety of factors to assess their risk in providing car insurance quotes and price the policy accordingly.
Review these 6 key factors and how you can improve your situation and lower your car insurance premium.
Factor 1: Driving Habits And History
Insurance companies work to understand your behavior in order to accurately assess your insurance needs as it relates to a potential auto insurance policy. If you are involved in multiple incidents over the course of a couple years the insurance carrier will view you as riskier to insure and may increase your premium.
The average distance you drive is also an important factor. The fewer number of miles driven per year decreases the odds of being involved in an accident. More miles driven increase the chances of an accident, increasing risk to the carrier and raising the premium on your policy. Many companies offer substantial discounts for driving minimal distances.
Solution: Reducing the number of claims you make is an important factor. if you are involved in a small incident it may be cheaper to fix it yourself instead of making an insurance claim.
Report an accurate number of miles that you drive to ensure your quote reflects realistic driving habits. If your driving behavior changes and you begin driving a greater or fewer number of miles be sure you update your coverage.
Factor 2: Vehicle Choice
The value of your vehicle will impact the cost of your insurance. The cost to repair a Porsche will be significantly higher than that of a Ford and your policy will reflect that. Another identifier that impacts premiums are safety features in the car. Higher rated safety features may decrease the cost of insurance. The safer the car, the lower the premium. When choosing a more expensive car consider the cost of insurance upfront. The monthly cost of the vehicle will reflect the car itself and insurance. Preliminary research for auto insurance quotes prior to purchasing a vehicle will allow you to calculate a realistic number what your monthly expense will be.
Solution: Check average insurance prices for the car you are planning to buy. Highly rated safety features may lower premiums.
Factor 3: Traffic Tickets
Reckless driving and speeding tickets will negatively impact your policy. Insurance companies prefer to insure safer drivers who avoid speeding and reduce the odds of accidents.
Driving safely pays off numerous ways. Not only do you get home safely but you also save money on your car insurance coverage.
Solution: Maintaining a clean record means fewer tickets and accidents in addition to lower insurance premiums. Many insurance companies will offer discounts and savings as perks for driving safely. Don’t miss out on future savings and rewards on your current policy.
Factor 4: Location
Insurance companies review local statistics. The state you live in, whether you live in an urban or rural area and crime rate all play a role in determining the likelihood of theft or incidents the policy may need to pay out. Your premium may be significantly different than a similar person in the same car as a result of your city, state and neighborhood.
Parking conditions may also factor into your policy. Parking in a garage or the street adjusts risk of incident in addition to the likelihood of theft or damage.
Solution: Insurance companies factor data differently, shop for quotes and compare multiple carriers when selecting your auto insurance to find the carrier that supports your personalized needs.
Factor 5: Gender
Statistically, male drivers are responsible for more accidents than female drivers. Therefore, the cost to insure men will be higher. When purchasing insurance for multiple drivers on the same policy consider who will be registered as the primary driver as the risk associated with the policy may be weighted towards their demographics.
Solution: Despite not having control of this factor, comparing quotes offers the ability to choose the policy that favors you the most.
Factor 6: Age
Similar to location, age is a key factor when assessing the risk of any given driver. Younger, less experienced drivers are more likely to cause accidents, therefore they are more expensive to insure. The most expensive age group to cover is young male drivers. More experienced drivers (with clean records) will receive less expensive policies. Experience helps up to a point, as eventually one ages out of the safer age segments and rates increase all over again.
Young drivers should compare quotes yearly with multiple carriers. As young drivers age, assuming they avoid multiple incidents, insurance rates may fall year after year.
Solution: Insurance companies target specific demographics, some specialize in insuring specific age groups. Compare costs with different providers to find the carrier who offers you the best coverage at the lowest rates.
Knowing what impacts insurance premiums can help you lower the cost of your coverage. Compare multiple quotes, remember companies price the same person and car differently. Over time, small adjustments to driving behavior may increase savings exponentially.