Car insurance premiums are one of the most expensive parts of owning a car. The average annual cost is about 3% to 5% of the total value of your vehicle. This can be even higher if you live in an at-risk area where theft and vandalism rates are high or if you own a sports car that has more risk factors than other types of cars.
So, what factors could affect your insurance premium? Why is car insurance so expensive? And which of the following affects one’s car insurance premium the most? Let’s discuss some common things that can have an impact on the price of your car insurance.
1. Your driving record
If you have a history of accidents or moving violations, your car insurance company will likely charge you more for coverage. Insurers view drivers with a poor driving record as a greater risk and thus charge them accordingly. If you’re looking to save money on your premiums, be sure to keep your driving record clean.
How to keep a clean driving record
Maintaining a clean driving record is essential if you want to keep your auto insurance premiums as low as possible. Fortunately, there are a few things you can do to help ensure this.
- Always obey the law while driving. This means following speed limits, not running red lights, and not drinking and driving.
- Be mindful of your surroundings. Always use caution when changing lanes or merging into traffic.
- Keep your car in good condition. Make sure your brakes and tires are in good shape and have your car regularly serviced by a qualified mechanic.
- Drive defensively. Be prepared for the unexpected, and give yourself plenty of time to react.
2. The make and model of your car
The make and model of your car can also affect your insurance premium. Certain cars are more expensive to insure than others. Sports cars, for example, are often more expensive to insure than sedans.
This is because they are seen as being riskier to insure. They are more likely to be involved in an accident, and they often cost more to repair.
3. Where you live
When it comes to car insurance, where you live is highly likely to affect your car insurance premiums. Certain areas are known to be cheaper than others, which is often due to the crime rate and the number of accidents that occur in that area. If you live in a high-risk area, your premiums will be higher than if you lived in a low-risk area.
4. How often you drive your car
How often you drive your car also has an impact on the cost of car insurance premiums. The more you drive, the more likely you are to be in an accident, which means your insurer will likely charge you more for coverage. If you don’t drive very often, you can usually save money on your premiums by choosing a policy that doesn’t include comprehensive and collision coverage.
5. How old you are
Age is also a factor that comes up in terms of car insurance premiums. Generally, younger drivers are seen as riskier to insure which means they will pay more in premiums for their coverage. These rates generally continue to rise until around age 25 when most young people have finished education and can adapt to driving responsibly – this is generally true no matter which country you’re in and is reflected in most car insurance quotes.
6. Your credit score
Your credit score is also a factor that car insurance companies take into account when determining your premiums. A low credit score can lead to higher premiums, as it is seen as an indicator of irresponsibility. This is because people with low credit scores are more likely to file a claim than those with high credit scores. If you’re looking to save money on your car insurance costs, be sure to keep your credit score in good shape.
Some useful tips for boosting your credit score and repairing your credit history include:
- Pay off any debts
- Keep your credit utilization low
- Avoid opening new credit lines
- Get a copy of your report and dispute any inaccuracies on it
7. Whether or not you have collision coverage
Collision coverage is optional, but it’s a good idea to have it if you can afford it. This type of coverage pays for damage to your car that occurs as a result of a collision with another vehicle or object. It also covers damage caused by theft or vandalism. If you don’t have collision coverage, you will likely have to pay for repairs out of your own pocket.
8. Whether or not you have comprehensive coverage
Comprehensive coverage is also optional but is usually worth paying for if you can afford it. This type of coverage pays for damage to your car that occurs as a result of something other than a collision, such as fire, theft, or vandalism. If you choose not to have comprehensive coverage, you will have to find another way to cover these costs. Opting for full coverage is therefore strongly recommended.
Understanding factors that influence car insurance premiums can help you to save money
Ultimately, many factors go into determining your car insurance premium. Some, like where you live, are beyond your control. Others, like how often you drive or your credit score, are within your control and can have a big impact on car insurance rates.
Keep these things in mind when comparing quotes for car insurance, and be sure to ask about premiums before signing up for a policy. By understanding which factors influence rates the most, you can make decisions that will save you money in the long run.