The process of purchasing an insurance cover for your car can be complicated, even if you’re speaking directly to an agent or buying online. If you’re a new car owner and green in this area, the terms used can be confusing. You might also have insurance misconceptions that could be misleading. For example, some people erroneously believe that cars of certain colors cost more in insurance, which is about as ridiculous as saying that cars with no engine go faster because they’re lighter.
Insurance companies consider a lot of factors when deciding on insurance premiums. Here are a few things you need to know about auto insurance premiums:
How Is the Cost of Insurance Premiums Determined?
Generally, every insurance company has its own individual criteria to calculate the cost of the premiums. However, they all tend to be influenced by similar factors, and there are some which obviously couldn’t be ignored. The most common one is the make and model of the car.
Larger cars tend to have higher insurance premiums. This is mainly because they are more expensive to repair and may be more difficult to get parts for. Also, some insurers may offer a discount on hybrid vehicles over regular ones; this is because hybrid vehicles are typically smaller and less powerful, which decreases the likelihood that they’ll be at the heart of an accident caused by speeding.
The following are other factors which influence the rates for insurance;
- Location: This might surprise you, but insurers do consider where you live as a factor. If you live in a high-crime area, then you’re considered a high-risk car owner; this means that there’s a higher chance your car will be stolen or damaged. You’ll also pay higher insurance fees if your area is prone to accidents. For this reason, car owners in urban areas tend to pay higher insurance fees than those in rural areas.
- Age: Let’s face it, with age comes experience. Statistics have shown time and again that younger drivers are more likely to cause accidents than older ones. Suffice it to say, younger drivers are statistically more of a risk. Insurance companies will often, therefore, charge more if the driver is below 25 years.
- Gender: Here’s another shocker: women drivers are less likely to cause accidents than their male counterparts. They are also less likely to drive under the influence (DUI). Even when they are in accidents, they tend not to be as serious as compared to males. This is entirely based on statistical data, and is more than likely the cause of pure chance, but nevertheless insurance companies do consider it. Because of this, women drivers typically receive lower insurance fees.
- Credit Score: In some states, insurance companies check credit scores when calculating premiums. Why? Statistics show that drivers with high credit scores are involved in fewer accidents, even if this is – again – by chance.
Of course, insurers also check how you drive your vehicle and how well it protects its occupants. They look at how much damage it can cause to another vehicle in case of collision; the higher the damage your vehicle is capable of causing, the higher an insurance premium you’re likely to end up paying.
Is There Anything I Can Do to Pay Lower Insurance Premiums?
Due to many small economic factors, the rates of insurance average premiums have been rising steadily over the years. There’s nothing much you can do to bring down the cost of insurance covers. However, there are a few steps that you can take to ensure that your premiums are not overly high.
- Mindful driving: This goes without saying. There are always going to be distractions, and these may make you lose focus on the road. One particular distraction whose caused cases have been increasing is the use of cellphones while driving. Whether it’s a message or a phone call, it can wait. If not, then pull in when safe and answer when parked.
Also, be mindful of speed limits to avoid any incidents or violations. If you have high traffic violation points, you’re likely to pay higher insurance fees.
- Take a defensive driving course: Some insurers may offer a discount for drivers who have completed an approved defensive driving course. Also, defensive driving can help you reduce the possibility of earning violation points because you’ll have learned how to avoid accidents. Remember to ask your insurance agent whether they have such discounts.
- Use public transport: When applying for an insurance cover, you’re required to fill out an application form. Among the questions is how many miles you drive annually. If you use the insured vehicle to drive more miles per day, you’re likely to pay more than a driver who drives less. If you can, try to use public transport for some activities which might not necessarily require you to drive.
- Review type of coverage: Dropping some types of car insurance coverage may be risky for some, but in other cases it may also be very beneficial. For example, if you drive an old car, it makes more sense to drop comprehensive insurance. Why? Your insurer is likely to total your car if you get in an accident. If you drive a cheaper car and insurance fees add up to half the total value of the car, then you should drop that insurance.
It’s also important to ask your agent about any discounts they offer. Some insurers may offer you a discount if you’ve installed an anti-theft device in your car. You may also be a member of a particular group or organization which could get you a discount.
The insurance buying process might seem complicated and confusing. However, it’s really not that hard. Factors that determine insurance costs include drivers’ age and gender, location, and model and make of vehicle. You can also ensure you don’t pay high premiums by driving mindfully, taking a defensive driving course, and reviewing the type of coverage you pay.
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