19, July 2021

What Factors Affect Your Car Insurance Premium?

Hearing the words “auto insurance” will make one conclude that it is meant to be used to cover accidents, and damages to one’s car. While that is partly true, there is much to it that you still need to discover before you buy one, for the reason that you cannot just grab the first ever policy offered to you by insurance companies. On top of that, you also have to know more about the factors that affect a car insurance premium. Note that pricing varies from one insurance company to another. This is why it is important to get a car insurance quote so that you can compare and contrast the price, as well as the coverage offered.

Driving Record

Have you caused road accidents in the past? Did you ever receive traffic tickets from enforcers? If the answer to both questions is yes, then chances are you need to pay more premium when compared to others. Insurance companies will most likely look at your driving history for the past five years, and if they see traffic violations, at-fault accidents, and DUI conviction, you may have a tough time looking for the right coverage for you.

There is such a thing as non-standard car insurance for these individuals, or you have the option to buy from your state’s assigned insurance agencies. If you are willing to wait, then you need to improve your track record before availing one.

Car Insurance History

If your driving record is important, your car insurance history is critical to the insurance company as well. If this is your first time to avail of a policy, then you will pay a higher rate. This will make up for the fact that the company won’t be able to evaluate your risk just yet. The company will likewise consider the time when your car has not been covered by insurance. This will also mean higher premiums for you.

Credit-Based Insurance Ratings

These are important for insurance companies, since they can use them to assess how likely you will make a claim from them. Take note that this type of insurance is banned in some states including Hawaii, Michigan, Massachusetts, and California.

Coverage

You have the option to choose your coverage. Be aware that this will impact the auto insurance premium too. This does not mean, however, that you need to stick to those with cheaper prices. You should know what you need, regardless of how much you will be paying for it. You do not want encountering financial disasters later on just because you skipped the higher-paying insurance with full coverage.

Other Factors

There are some other factors that insurance companies take a look at when computing for insurance premium. One is your age and driving experience. If you are between 16 and 19 years old, you are most likely to pay more. The type of car that you drive is another. The insurance company will need this to evaluate possible repair costs, and comprehensive claims made by other drivers using a similar model as the one you own. Where you live affects the computation too. Those who live in areas with inclement weather, or those areas prone to car theft will need to pay higher for their insurance.

Gender, occupation, marital status, education, and home ownership affect prices as well.