Factors that Affect Your Auto Insurance Premium
People often wonder what goes into determining how much they pay for their monthly premiums for auto insurance. There are a variety of factors that most insurance providers use to calculate your premiums. The most important thing to remember is that for most of these factors, you have all of the control. This means that how much you wind up paying for car insurance is really up to you.
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Here are some of the key factors that go into auto insurance premium prices:
- Your deductible and coverage. Most auto insurance providers allow you to choose how much you’ll pay for your deductible and whether you want additional coverage not required by state laws. The higher you pay on your deductible, the lower of a monthly payment you’ll make, and vice versa. Additional coverage adds to your premiums.
- The type of car you drive. How old is your car? What is your car’s vehicle safety rating? What is the make and model of your car? How likely is your car to be stolen? The answers to all of these questions factor into how much you’ll pay on your premium.
- Your driving habits. How often and how far you drive make a big difference in your auto insurance costs. A good general rule of thumb is that the more time you spend in your car, the more expensive you will be to insure. If you can’t avoid driving a lot, consider joining a car pool, using public transportation or riding your bike. By decreasing your annual driving mileage, you could lower your premiums.
- Where you drive. Drivers in urban areas tend to have higher premiums because of a greater risk of vandalism, accidents and theft. This is also true for people who park their cars on the streets or outside instead of in a garage.
- Your driving record. If you have a previous accident history, you will typically have to pay more than those who do not have any accidents on their record. As time goes on, however, the effect that a previous accident has on your premium will shrink.
- Certain demographics. Your age, marital status and sex factor into the amount you pay on your premium. Single males under 25 are the most expensive demographic to insure.
Consider where you stand in each of these areas, and you’ll find it easier to determine how much you will have to pay for a monthly car insurance premium!