Factors That Affect Your Auto Insurance Premium

The more risk you have of using your insurance, the more your insurance premiums costs will be. There are many factors that determine your level of risk including, history, location, vehicle, age, and gender.

If you are in the process of purchasing a vehicle or are thinking of changing insurance carriers, take the time to familiarize yourself with all the factors that determine your annual premiums. Compare quotes from multiple companies and inquire about potential discounts. Choose the best policy and premium to protect not only your vehicle, but your financial stability as well.

Driving history

Drivers who have a history of collisions, DUIs (driving under the influence of alcohol or drugs), or excessive traffic violations pay more for their annual premiums than drivers with clean driving records do. Your insurance carrier may excuse some violations; however, be sure to discuss how each violation in your driving record affects your premiums.

Age

Teenagers are the riskiest drivers on the road. They have little real world experience and therefore pay more for their annual premiums than older, mature drivers do. Senior drivers, on the other hand, typically drive less than most age groups and usually qualify for senior discounts as well as infrequent driver discounts.

Gender

The gender gap is slowly closing, but as it stands now, males pay more for insurance premiums than female drives do. Male drivers tend to drive more aggressively and be involved in more accidents.

Vehicle

The type and style of vehicle you drive greatly affects your insurance premiums. Drivers who own and operate vehicles that consistently receive superior crash test ratings and safety awards pay less than drivers who operate less-safe vehicles.

Location

Drivers who live in rural, non-congested areas pay less than drives that live in metropolitan areas. This is because city drivers encounter more daily risks on the road than rural drivers do.

Occupation and usage

What you do for a living, affects your annual insurance premium. Of course, drivers who use their vehicles for business purposes such as transporting goods, or people, pay higher premiums than drivers who only use their vehicle for commuting purposes.

Your occupation also affects the amount of usage on your vehicle. For example, if use your vehicle for short daily commutes to an office, you might qualify for a low usage discount. Insurance carriers have their own guidelines regarding the average amount of daily miles a driver uses. If your drive less than that amount, you pay a lower annual premium.

Accessories

Installing additional accessories on your vehicle may affect your annual premium. For example, installing theft prevention and recovery devices like car alarms, wheel and hood locks, and vehicle tracking systems may qualify you for a substantial discount on your premium. Each insurance carrier is different and has a list of approved accessories. Be sure to check with your insurance company before adding any accessory to your vehicle.

Combining policies

If you have more than one policy such as car, home, or boat insured with the same company, you might qualify for a substantial reduction in your annual premium compared with someone who insures with a variety of companies.

Deductibles

Choosing a deductible for your insurance policy is as important as choosing the amount of coverage. For example, a high deductible reduces annual premiums, but requires the driver to cover the full deductible before the insurance company pays for any amount of damage. Carrying a high deductible is not a good idea for drivers who operate their vehicles in congested metropolitan areas that have more risk of theft, vandalism, and collision.

Credit rating

Credit scores affect every substantial financial purchase including car insurance. If you have had trouble paying bills in the past, your insurance premiums could be higher than driver's who maintain good credit.

Education

The amount of driving education you receive, affects your annual insurance premium. For example, new drivers who complete driver's education at school or with a private company qualify for less expensive insurance premiums than non-educated drivers do. If the new driver in your family is in school and receives above average grades, he may also qualify for cheaper insurance premiums.

Experienced drivers who continue their education such as taking a defensive driving class also have the potential of qualifying for lower insurance premiums. Check with your insurance company to see if they offer any additional discounts for continuing education.

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