Car insurance rates are a tricky business. Have you ever wondered who sets your auto insurance rates and how the rates are actually derived?
Many factors determine how much you will pay. Most of these are common sense and you probably already know this, but let’s go over them just in case.
The first thing that happens is that the insurance company determines all your costs for the previous year. This includes all claims, the cost of operations and any costs they incur. They then take those costs and divide them among all the drivers insured with them. This sets a baseline for them, but it doesn’t mean that’s what you’ll pay.
Your driving record plays a big role in how much your premiums will be and whether you get a discount. The better your driving record, the lower the total cost to insure your car. His driving record includes car accidents and speeding tickets. If you have not insured a vehicle for a few years, they will also penalize you. This sounds crazy, but it’s because they have no way of tracking your driving habits that they consider it a serious risk.
The coverage you buy will be reflected in your premiums. Deductibles are a good way to save money. Check with your insurance company and find out what effect raising and lowering deductibles has on your policy. Remember to never take a deductible that is more than you are willing or able to pay in the event of a claim. Your insurance company will not share its share until you do.
Age is also a determining factor. Studies have shown that younger drivers are involved in more accidents than older drivers. Some of this is due to his lack of experience. Most insurance companies charge you more until you are 25 years old. Although some will offer a discount for each year that you drive without accidents and without traffic violations.
The type of vehicle you drive and the distance you drive affect your rates. That fabulous sport you’ve been watching could cost you a lot. You should check the rates on any vehicle before you buy it to make sure you are willing to pay the rates. Some cars get better discounts than others because they have more security features, like anti-theft immobilizers. Some cars also qualify on the list because thieves don’t like them so they don’t steal them.
Your insurance company also charges you more if you drive a lot. The less you drive, the cheaper your premiums will be. Most insurance companies use an average of 10,000 miles in a year. If you exceed this, you can expect your premiums to increase.
Where you live also affects your rates. Drivers from big cities will pay much more than someone who lives in a rural area or a small town. That’s because cities have more robberies, more accidents, and more problems in general.
Follow this information to help save on premiums. Don’t forget to shop online. Rates can vary dramatically from company to company. With a few mouse clicks you can have multiple quotes and get low cost insurance.