The average price of an auto insurance policy is derived from a variety of factors. Many of these variables are common knowledge and make sense for the most part, but it’s always a good idea to brush up on what insurance companies look for when determining how much your coverage will cost.
Driving Record – Your car insurance policy is priced based on 6 main areas. The first is your driving record. The key to remember is that the better your driving record, the lower the total cost to insure your car. This would include car accidents, speeding tickets, and believe it or not, if you have been without insurance for several years. The good news is that you can directly control many of these factors. Focus on maintaining a clean driving record and this area shouldn’t make your rates outrageous.
Coverage amount: Do a self-check at some point and call your insurance company to see what impact increasing and decreasing your deductibles and the amount of coverage has on the price of your insurance. Raising a deductible lowers your monthly payment. Increasing the deductible has the opposite effect. The same is true for actual coverage amounts.
Age: Case scholars have shown that younger drivers are involved in more accidents than older drivers. This potential for being involved in a collision is the result of inexperience at the wheel of a car. Generally speaking, most insurance companies charge more for people under the age of 25.
Vehicle Model and Driving Mileage: If you’re interested in that fancy new sports car, you might want to check how much it will affect the price of your car insurance policy. Thanks in large part to theft, vehicle costs, and safety records, some cars carry a higher premium than other vehicles. As if that weren’t bad enough, the number of annual miles you put on your vehicle while driving can boost your auto policy. The average used is 10,000 miles in a year. If you exceed that total, you can expect a rate increase based on your higher potential for being involved in a car accident.
Your residence – This is a pretty safe bet that you will pay more for your car insurance policy if you live in a big city compared to a nice farm in the country. The city is likely to have more thefts and accidents, leading to higher costs absorbed by the insurance company and then passed on to the consumer when insurance companies determine the price of your auto insurance policy.
Hopefully, this information can help you focus on a few areas within your auto policy that you can review with your insurance agent in hopes of actually reducing your auto insurance rates rather than increasing them.