The Factors that Affect Car Insurance Rate

Auto insurance, which is important for drivers and car owners to help them pay the damages in case of an accident, is a legal requirement on all states, or at the very least, strongly recommends people to have this coverage.

According to auto insurance companies, the rate or premium of coverage will depend on several factors including:

• Age of the policy holder. Younger drivers, specifically teenagers, have higher premiums because they are more likely to encounter accidents and are more reckless drivers than adults.

• Gender. Statistics show that women are safer drivers than men. According to road safety experts however, the trend is slowly changing.

• The place where the policy holder lives. People who are living in congested cities have higher insurance rates than those who are living in suburban or less populated places.

• Marital status. Several studies suggested that married people, especially those with children, are more cautious drivers compared to singles.

• Car’s value. The more expensive the car is, the higher the premiums for the policy holder.

• Multiple cars. Many insurance companies give discounts for people who have insured their other cars to the same provider.

• The purpose of the vehicle. Insurance companies require higher premiums for vehicles used for commercial purposes such as delivering, touring customers, and transporting goods.

• Driving history. A good record means that a person is less likely to encounter accidents, thus, insurance companies require lower rates.

• Education. Usually, people with better education are offered with lower premiums.

• Credit rating. According to insurance lawyers, companies charge people with a higher premium if they have poor or no credit history.

• Auto theft protection devices and safety equipment. If drivers will install such devices, the premium (especially for the theft coverage) will be greatly reduced.

• Occupation. Several studies suggested that certain professions have a greater chance to be involved in a car accident. For instance, a delivery driver has a higher risk to accidents compared to a computer specialist who sits all day on his office.

• The total miles driven annually. People who often use their cars are more likely to encounter traffic accidents compared to those who rarely travel.

• Distance traveled from the house to work.

• Years of driving experience. People who have an extensive driving history with clean records (no traffic tickets and violations) will have lower insurance premium.

• Impressive school grades for teenage drivers. Some insurance companies provide discounts for teenage drivers who have good grades in their schools.

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How Keep Your Car Insurance Rates Low

Car insurance rates are calculated accounting in various factors that determine the “risk” of the driver.

A “high-risk” driver will have a higher car insurance rate while a “low-risk” driver will pay a lesser premium.

The factors that are considered for calculating your car insurance rates are:

• Age - According to studies, teen and elderly drivers are more likely to be involved in a car accident than other age groups.

• Car model – Insurance companies also consider the possibility of your car being stolen. A more expensive car is much more likely to be stolen than a simple car.

• Accident History – Involvement in previous accidents automatically makes you a high-risk driver. If you are liable for multiple accidents, some insurance companies may even label you as “uninsurable.”

• Location – If you are living in a highly populated area, your insurance rate will be higher as there is more possibility of being involved in an accident than in areas with a small population.

• Gender – According to statistics, males are more involved in an accident than females, giving them a higher car insurance rate. However, recent studies show that female related accident rates are catching up to men

These calculations may seem unfair to some, but it is the way it is and insurance companies are not likely to change its methods anytime soon.

The least you can do is to try and decrease your car insurance rates. The key to that is showing that you are a low-risk driver.

Here are some tips you can follow to decrease your car insurance rates:

Take a Driver’s Education Course

Although it is not required before getting a license, a driver’s education course could slash about 10% from your car insurance rate.

It will show that you are serious about being a responsible driver, and who knows, you might actually learn how to be a defensive driver after.

Buy a Safe Car

An expensive sports car is more likely to be stolen and an SUV is prone to rollovers. Buy a simple car like a sedan.

It will greatly lower your car insurance rates.

In addition, some insurance companies also give discounts for cars that are environment friendly.

Use One Insurance Company

If you insure your home and other properties together with your car with one insurance provider, you should receive discounts.

This also applies to multiple cars. Insuring all cars under one insurance company will lower your car insurance rate.

Add Safety Features to your Car

Safety features such as automatic seatbelts and side airbags will prevent or lessen injuries during an accident.

Less injuries means less claims for insurance companies, so it should lower your car insurance rate.

Add Anti-Theft Devices

Adding anti-theft devices and parking your car in a garage reduces the risk of your car being stolen.

The reduced risk of theft would reduce your car insurance rate. Discounts can reach up to 25 percent.

Those are just some of the ways to keep your car insurance rates low. The best way to keep them low, though, is to avoid accidents.

That is why it is important that you consult a car accident attorney if you are involved in one. They will help make sure that if the accident is not your fault, then the claim will be made from the liable party’s insurance company and not your own.

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