Many people face an increase in auto insurance premiums every year without knowing how to stop the increases. There are a number of factors that can negatively affect the premiums paid for auto insurance. Knowing these factors and managing them can make a big difference when it comes time to renew your policy.
The make and model of your car have a big impact on your premiums. In many cases, the more expensive cars are more expensive to insure. This is because spare parts and labor are more expensive. Safer cars, even larger ones, can lower premiums because drivers and passengers are less likely to be killed or seriously injured in these cars.
Personal driving history has a dramatic effect on premiums. Accidents can and often do increase your premiums, and too many accidents can lead to a non-renewal of a policy. Traffic tickets not only cost you money when incurred, but are controlled by insurance companies. Drivers who receive tickets are considered higher risk and cost more to insure.
In most cases, cars become cheaper to insure as they age. At a certain point, the replacement value of an older car is low enough that collision coverage is not needed, as the premiums would be higher than the cost of buying an identical car of the same age.
The number of miles traveled during a year is a question that insurers ask. This is because a car that is in the driveway has a much lower risk of being in an accident than a car that is in traffic. People who work at home and only drive for pleasure will save much more than people who travel twenty or thirty miles or more each day.
Similarly, a car owner who lives in a rural area will have lower premiums than one who lives in a high-traffic urban area. This is due not only to the increased risk of accidents in urban areas, but also to the higher rates of car theft in urban areas. Some people in urban areas incur a very high cost of transportation, including parking fees, and some of them decide to rely entirely on public transportation.
The age of a driver is another factor in setting rates. Younger drivers are more expensive to insure, as they tend to have more accidents than older drivers. Older drivers are safer and more experienced drivers in most cases. These higher rates can be offset somewhat if all drivers in a household have the same insurance policy, resulting in a multiple driver discount.
Every driver needs insurance, but hopes to never have to use insurance coverage. Taking the time to understand the factors that drive increases in auto insurance premiums can help the consumer save a great deal of money on insurance.
