A roadmap to find out what influences your car insurance premiums.
Six Major Factors that Influence Auto Insurance Rates
No two car insurance rates are the same. From driver to driver, several factors will change how much a policyholder pays for even the same coverage. Here we review the six main components that go into the auto insurance rates recipe.
1. How Much You Drive
Car insurance companies measure rates based on risk. The more miles you drive, the higher the risk you will be in a car accident. You’ll pay more if you drive more. If, on the other hand, you drive fewer than 10,000 miles annually, you may qualify for a low mileage discount from your auto insurer. People who carpool often receive discounts because they drive less frequently.
2. Your Driving History
Being a good driver matters to car insurers. Many insurance companies offer special discounts to good drivers. If you have had a series of accidents or traffic violations, you may pay more for your premium. If you have not carried car insurance in several years, you may also pay more for your policy.
3. Where You Live
Every city has trends when it comes to car accidents, thefts and lawsuits. If the numbers for these are high where you live, you may pay more for auto insurance. In larger cities, where costs are higher (for example, car repair costs) you may also pay a premium. Suburban areas, on the other hand, have lower instances of accidents, and can get you lower rates.
4. How Old You Are
Every age group has a different overall risk level for getting into an accident. Teenagers, the least experienced drivers, are much more likely to get in a collision than seniors, and so they will pay more for their auto insurance. Those 24 and under pay the highest rates, while drivers 40 to 50 pay the lowest.
5. What You Drive
The type of car or truck you drive also affects what you pay. Insurers look at the chance the car will be stolen, costs to repair the vehicle and the safety rating of that model to determine your rate. New cars, which are more likely to get stolen and are more costly to repair, usually cost more to insure than older models.
6. Your Insurance Coverage
Each policyholder chooses a different amount and combination of car insurance coverage, so this too plays into what your rate will be. You may choose a bare bones policy, or go all out for full coverage, low deductibles and extra bells and whistles. Remember too that you may qualify for various discounts, such as a good driver discount, multi-policy discount or even a military discount.