When shopping for car insurance, it can be tempting to reduce your rates by choosing lower amounts of coverage or by raising your deductibles. These are, of course, the two most obvious factors that affect the cost of your auto insurance. You may not realize it, but your overall rate is also affected by many more different factors – some of which you can control, and many of which you cannot. However, knowing what affects your rate can help you make a more informed decision when purchasing insurance, and can help you know exactly what to do to lower your expenses.
Demographic Factors
Your gender, age, marital status, geographical location, and credit score all affect your insurance rates in different ways.
1. Gender and Age
Young men usually incur higher
rates than young women as statistically, more male teenagers have
accidents than female teenagers. However, older men generally have
better rates than older women. Some evidence suggests that older women
are in more minor accidents than older men – though the difference in
premium costs usually isn’t drastic.
2. Marital Status
Married people tend to have fewer
accidents than single people; therefore, getting married (especially for
men) can significantly lower your rate. How much your rate decreases
depends on your previous driving history – if you are a man who has
never been in an accident and has a clean driving record, you could see
your rates nearly halved.
3. Where You Live
Because most traffic accidents
occur close to home, the area you live in greatly affects your rates.
More densely populated neighborhoods with more cars mean you are at a
higher risk of accidents, theft, and collisions with injuries.
Repairing your car also costs more in some areas, and some areas have
higher rates of theft. Plus, in this economy, many urban areas with high
unemployment rates have a lot of uninsured drivers, as many people
can’t afford to insure their cars. Detroit and Philadelphia are two of
the most expensive cities in which to insure a car, as they both have
high traffic density and high rates of uninsured drivers.
4. Credit Score
Many insurance companies take your credit score into
account when determining your rate. There is no specific point at which
your credit score begins to affect your rate, but in general, lower
scores mean higher insurance premiums.
5. Profession
Auto insurance companies may also make
correlations between a person’s risk of accident and their profession,
and they can adjust your premium accordingly if they think you’re more
likely to get in an accident. For example, delivery drivers and
journalists are on the road constantly, and thus are more likely to be
in an accident, whereas airline pilots often just drive between the
airport and home, and don’t spend much time on the road. Others, such as
police officers, paramedics, nuns, and insurance underwriters, often
receive a good rate, as they are seen to be more careful than the
average driver.
Car-Related Factors
The car you drive significantly affects your rate, since some cars are more likely to be stolen, lack safety features that prevent accidents, or cost more to repair. 6. Safety Rating
Owning a vehicle with a high safety rating means there is a lower chance of needing to pay for your or your passengers’ medical bills – therefore, your rate will be lower. Owning a car with a lower safety rating, however, will usually result in a higher cost. The safety rating is based on several factors, including the likelihood of the car’s owner getting into an accident, and also how likely a passenger is to be injured in an accident. Safety features such as airbags, automatic seat belts, and traction control help make your car safer, which makes you less likely to get in an accident, as well as making it less dangerous. 7. Vehicle Size
Larger cars are generally safer than smaller cars in an accident. Therefore, many larger cars with good safety ratings have lower premiums than smaller cars with otherwise similar ratings. However, cars with larger engines relative to body size tend to have higher rates – for instance, insurance for a sports car with a V8 engine costs much more than a small car with a V4 engine.
8. Age of the Car
Though the repair costs of an
older vehicle are similar to the costs of a newer vehicle, an older car
is more likely to be “totaled” in an accident. This is because the cost
of significant repairs needed for an older car can often be higher than
the vehicle’s entire worth. Therefore, it is likely that the owner would
simply discard the vehicle and replace it, rather than paying for
repairs.
Since the cost to replace a new car is much higher than to replace an
old car, newer cars are not considered to be totaled as often, and
generally have much higher collision coverage rates than
older autos. The higher coverage translates to a higher premium for a
newer car.
However, if your car is quite old, you could probably drop the collision
coverage altogether and simply save the money to buy a replacement
jalopy if you get in an accident.
9. Likelihood of Theft
Some cars are more attractive
to thieves than others, and a car model that hits the top 10 most
stolen list is likely to have higher rates than one that’s not a likely
target. But if you have a car alarm or other anti-theft features, this
can lower the premium.
Personal Driving Habits
While the above items do influence your overall rate, the most important
factor in determining your insurance costs is your personal driving
record.
10. Driving History
If you have been in accidents, received any tickets, or made previous auto insurance claims,
the insurance company has learned that you’re more likely to make
another claim than a similar driver who doesn’t have any blemishes on
their record. If your driving record is bad enough, some insurance
companies will refuse to give you insurance at all.
Fortunately, these blemishes tend to become less important over time. So
if you had some wild years with a few tickets or accidents in your
past, making an effort to drive more slowly and carefully in order to
avoid future problems can pay off in time. Most tickets and non-injury
accidents stop affecting your rate after three years, and injury
accidents generally do not affect your rate after five years. A DUI
ticket can affect your premium for up to 10 years, however, and many
companies won’t insure someone with one.
11. Driving Activity
Some companies can alter your
rate based on what you use your car for, the distance you drive, and
where and when you drive. Business commuters usually put more miles on
their car, and the more you’re on the road, the more likely you are to
get in an accident. You may be able to get a discount on your insurance
if you don’t drive the car much, or don’t use it to commute to work.
Plus, if you can keep your car in a secure location, such as a garage,
it’s less likely to incur damage, which lowers your rate further.
Final Word
Paying for car insurance is a major part of the cost of owning a car, so anything you can do to lower the rate is beneficial for your budget. If you haven’t checked competitor prices for a while, you might be paying too much for your car insurance. Check out AB Insurance Brokers and see what kind of rates they can offer.
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