Auto Insurance can be confusing and determining your rate can involve several different factors. The factors affecting your rate can vary, however, these are some of the common factors that will be considered:
1. The Car You Drive.
What you drive is important. The safer your car, the more favorable the risk is to the Insurer. Auto Insurance Companies compile data on vehicles they insure, as well as tests done by safety institutes and consumer protection organizations. This data is used to determine which vehicles likely sustain less damage and cause fewer injuries to occupants. This results in vehicles with higher safety ratings being more affordable to insure. Vehicles with lower safety ratings can cost more to insure due to the higher likelihood of greater damage and/or injuries to occupants. So, the next time you set out to purchase a vehicle, be sure to check on the safety ratings for the make/model/year of the vehicle you are interested in. Doing so may very well save you money over the life of your ownership of your new car.
2. Your Zip Code
Where you live matters. Additionally, Insurance Companies also have access to Accident and Crime statistics, which include vandalism and theft. Depending on your zip code, your rates may be higher due these types of activities being prevalent in your area. When living in an area where these activities are fewer, one may realize a discount on their Auto Insurance premiums. Typically, the more Urban area one resides in, the higher the premiums due to this factor. Rural areas quite often experience much lower levels of these activities and thus can enjoy lower rates.
3. The Coverage Amounts & Deductibles You Choose
In California, the minimum required Auto Insurance Coverage is 15/30/5. Higher coverage amounts can be chosen. These are the minimum coverage amounts needed in order to legally operate a vehicle in California. Higher coverage amounts typically mean higher premiums. Higher deductibles typically mean lower rates, sometimes substantially, depending on the Insurance Company. This combination of factors play a pivotal role in the amount you’ll pay in monthly premiums. They will also determine your coverage and out of pocket expenses in the event of an accident/claim.
When deciding on the amount of coverage, one needs to weigh the amount of liability they are comfortable with. Also the value of assets they wish to protect. A higher coverage amount will give greater financial protection, but it will typically cause a higher monthly premium.
A higher deductible can provide a lower monthly premium, but when it comes time to file a claim, the insured (you) has a higher out of pocket cost in order to have repairs completed. So, buyer beware! When deciding a deductible amount be sure to factor in the out of pocket expense needed when an accident occurs, and not just the lower monthly premiums that come with a lower deductible.
4. Your Driving Record
Good drivers very often have favorable Auto Insurance rates. This doesn’t mean that drivers who have had a good stretch of accident less and citation less driving can let their guards down. In many cases it takes just one hiccup on a driver’s record, and that driver’s rate can increase.
As the freshness of a citation or accident on your record wears off, it will affect your insurance rates less and less. It can serve as a reminder to drive defensively, and to mind the rules of the road, so as not to have your rates increase further.
The worse one’s driving record is, the higher their insurance premiums will be, and in severe cases, drivers may not be able to obtain auto insurance due to the marks on their driving record. Some reasons for being denied insurance include:
- A history of insurance violation and/or a lapse in insurance coverage.
- Having poor credit
- Having a serious and/or injury causing accident
- Serious vehicle code violation including, but not limited to, DUI
5. How Far You Drive & How Often
Regardless of how perfect your driving history may be, it is a fact that the more often you are on the road, and the further you travel, you are more likely to be involved in an accident. With this in mind, drivers who use their car for business, and/or commute for longer distances, tend to pay higher premiums.
A few ideas to mitigate the high mileage and long hours on the road are:
- Create a carpool with coworkers
- Join a Ride Share program
- Public Transportation
- Locate Park and Ride services near you.
Now you have an idea of some of the factors that drive the cost of your Auto Insurance.
Keep these items in mind the next time you are purchasing and/or renewing your Automobile Insurance, and don’t be afraid to shop around for insurance through different Insurance Carriers. Carriers change their rates frequently, and just because a certain company offered the best policy & rates last time, does not mean that remains true.
Now that you know what to look for when trying to save money on your Auto Insurance, but you are still weary of searching for the best policy for your budget and coverage needs,
feel free to click here and request a FREE No Hassle quote from First Beneficial Insurance Services. We’ll be glad to shop several Insurance Companies and provide you with the policies best suited to your individual circumstances, with no obligation to purchase!
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