Car insurance premiums can be confusing if you do not know what the programs that the agents use do. Whether you use an online platform or go in person and sit face to face with a representative, your information will be entered into a computer program that takes your answers and assigns you a risk number. The higher the risk number, the higher your premium will be.
That is the easy explanation of how your premium is calculated, but there are many factors that affect that risk number. Let us look at the most common things that can cause changes in your premiums.
Age-Your age will make a difference on your premium. Young drivers are a higher risk because they are not experienced. This will increase the premiums. As we all reach our mid-twenties rates will come down. As we hit our mid-sixties the premiums will go back up. It is a cycle that we cannot control.
Gender-It may not seem fair, but the insurance companies have mathematical equations that use statistics that have been gathered throughout the nation. Check to see what guidelines your specific carrier follows. If you are looking around for a new policy check this out to see how it affects you.
Credit-In today’s technological world it is imperative to keep your credit score as high as you can, and your credit history stable. The better your report looks, the cheaper that your rates will be. You should always be improving this report, even for things outside of the insurance world.
Driving Record-Your premium will also be based off your driving record. Safe driving can help lower your costs. Companies today have applications, or devices, to track you and monitor your driving habits. They can lower your premiums if you opt in for it. Of course, this could be a bad thing if you drive around like you are in a race car.
Location–best auto insurance companies will consider where you live when calculating your premium. This can be good, or bad, depending on your situation. A house in a neighborhood high with crime will cost you more than if you live in an apartment with monitored parking lots. Location can also mean what state and county you live in. Each area will have set minimum amounts and may add on some taxes or fees.
Vehicle-The vehicle that you drive will be factored into the price. The more that a vehicle will cost to repair or replace, the higher the premiums will be. To break this down into an uncomplicated way just picture this. Compare an old car that that has metal parts to a new car made with fiberglass. The new car will cost more to fix so you will pay more premiums. And you can take those two cars and find the value of them. The higher the value is, the more it will cost to replace, so the higher your premiums will be.
Driving Amounts-How much you drive will affect your premium. If you are walking, or using the city bus, more than you drive it will reflect on your bill. The more miles that you put on in a year, the higher the risk is that you will get into an accident, so your costs will go up.
Each company will have their own factors that they use, but these are the basic ones that you need to be aware of. Some carriers will offer discounts for numerous things that can lower your premiums, such as defensive driving classes and combining insurance policies. If you have something that you think is special, and pertinent, ask your agent. You will never know unless you ask.
