There are many factors that insurance companies will use to calculate how much you will pay for your auto insurance. The important thing to remember is that you are the one in control of several of these factors. Some factors that help determine what you will pay are: age, location, and driving habits. Also, the type of vehicle you drive and your accident record determine what you will pay. The choices you make regarding the type of coverage you want or need also help to determine the cost of your premium.
Here is a detailed look at some of the factors that determine your auto insurance premiums, as well as some helpful hints for keeping the cost down.
1) Coverage & Deductible Desired.
When you are purchasing your auto insurance, your provider will allow you to choose the deductible that you want and whether or not you want to add any additional coverage that isn’t required by your state. The specifics of the coverage and deductibles you choose will play a major role in your monthly payment. Usually, when you choose a higher deductible, you have a lower monthly payment and if you choose a lower deductible you will have a higher monthly payment. If you choose any additional coverage, it will give you some financial protection, but it will also add to your monthly payment. The simple formula for this is- you get what you pay for.
2) What You Drive.
Auto insurance companies develop vehicle safety ratings by collecting large amounts of data from customer claims and by analyzing safety reports from the auto industry. Based on this information, they will offer discounts to consumers who drive safer vehicles. Sometimes, insurance companies will increase premiums for cars that are more likely to get damaged, or whose occupants are more likely to be injured in the case of an accident, or even a vehicle that is more likely to get stolen. How new your car is can also affect the price, because newer cars are valued much higher, insurance rates will also increase to cover this.
3) Distance and How Often You Drive.
If you use your car for business and/or have a long-distance commute, you will pay more than those individuals who don’t drive as often. No matter how safe a driver you are, the more miles you drive in a year, the more likely you are to be in an accident. If you can figure out a way to reduce your annual driving mileage, you may be able to lower your premiums.
What do Scientists, Pilots, Actors, and Artists have in common that could translate to lower insurance premiums? While a first guess would be- nothing, the fact that these professions require people who are generally more meticulous and careful means they often pay less for car insurance. On the other side of the spectrum, jobs that are high stress can often lead to much higher insurance rates. Business owners and doctors are some of the professionals who are caught out by these pricing systems.
5) Driving Record.
If you have an unfortunate history of causing accidents, you will pay more than someone who is accident-free for several years. Even if you have been accident-free for a long time, don’t get comfortable in this- remain vigilant and keep up your driving habits. Though you can’t go back and start over, you should drive with caution and care- eventually any past accidents on your record will go away and your premiums will decrease.
6) Age, Sex, & Marital Status.
It probably comes as no surprise that younger drivers will be charged more. They will inevitably have less experience, and are therefore more prone to accidents. In fact 16 year-olds have the highest driver fatality rate in the US**. As far as marital status is concerned, married couples are often given a discount on their auto insurance. Different companies do this for different reasons, but it is a widely known trend. If you are an unmarried male however, you can expect to actually be charged more. Not due to any gender-bias, but because statistics have conclusively shown that we drive more often and take more risks while doing it.