10 Factors That Affect Your Car Insurance Premium

Yes we all hate buying auto insurance and keep wondering as to how we can save money on car insurance or extract a discount from the insurance agent. In order to get a fair deal in auto insurance market you need to understand what factors affect your car insurance premium and how to control some of them to your advantage.
Insurance premiums are calculated on the basis of risk parameters perceived by insurer and having knowledge of them will help you take an informed decision without compromising on necessary coverage.

Statistical Factors that determine your auto quote

  1. Your Age and Gender
    It has been observed that young male drivers have been involved in higher rates of car accidents. Due to more vulnerability of this demographic group, premiums charged by insurers will be higher. At the same time old males usually have lower premium rates as compared to old women drivers.
  2. Your Marital Status
    Married individuals generally have lower rate of accidents as compared to singles, some may argue with the facts but sense of responsibility does plays a factor here.
  3. Your Profession
    Professions which involve remaining on road for long duration attract higher premiums. Also the profile of job matters here, for example a doctor or police officer is generally considered to be more responsible in his driving habits and thus gets a better quote.
  4. Your area of residence
    In case you live at places where theft, vandalism or accidents occur frequently then your premium amount will shoot up. Also city drivers usually have to cough-up more premium than their rural counterparts. In U.S. Philadelphia and Detroit have the most expensive auto insurance rates because of the high traffic and large number of uninsured drivers on the road.
  5. Type of Vehicle to be covered
    Cars with better safety mechanism in place command less premium thus take note of safety rating of the car before buying it. At the same time cars that are driven by young drivers attract more premium because statistically insurers receive more claims on those particular models. Car with powerful engine are more likely to be involved in costly accident thus sports car incur higher insurance costs.
  6. Age of Car
    Old cars usually have lesser premiums because in case of total damage or significant damage, drivers are mostly likely to opt for dumping it and buying another vehicle. Repairing old car can be more or equally expensive than buying a new car. Whereas in case of new cars, drivers like to go for repairs thus they end up making more claims to insurers, thus high premium.

  7. Personal Factors that influence your auto insurance premium

  8. Your Driving Record
    It pays to be responsible driver, a good driving history can go a long way in reducing the auto insurance burden. Although you can’t change your history but remaining cautious over the period of years can be beneficial to you in long run. Note a DUI ticket can leave a blemish on your history for upto 10 years.
  9. Your Credit History
    You may feel that your credit risk has nothing to do with auto coverage but in reality it is a very important parameter considered by insurers which fixing your rate. A responsible citizen with good credit scores is less likely to file claims. (Read more about How Credit Cards Affect Your Credit Score ).
  10. How much you drive and where
    In case you don’t take your car for a ride often then the possibility of accidental claims is less thus it will benefit you. At the same time if you drive a car at accidental prone roads then your auto quote may increase. ( Read about Pay-As-You-Drive Insurance or Usage Based Insurance)
  11. Type of Coverage You Opt-for
    Depending on the legal obligations and your risk perception you may go for various types of car insurance like third-party, comprehensive, theft, etc. More coverage translates to higher auto quote.
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