We all remember the first car that we ever had – how it smelled, how smooth the steering wheel was, and how it gave us an exhilarating feeling of freedom whenever we were behind the wheel. As such, it is always the fun that we remember and not the more serious and less fun ones, such as auto insurance. However, finding the right coverage can be less of a nightmare if you are aware of the factors that determine the rates you will have to pay. This also helps improve your chances at paying a more affordable and cost-effective premium.
Your Driving Record
Auto-insurance companies consider your driving record to be the most important factor when it comes to determining your premiums. This covers any history of violations, collisions, convictions as well as departmental actions. A point system is used to score your overall driving standing, and the more violations you commit, the more blemished your record would be. However fret not, as being a better driver and avoiding these altercations could also add some positive points to your overall standing. Thus, similar to a credit score, it is imperative that you check your driving record regularly to ensure that there are no incorrect entries that could result in higher premiums than what you should really pay for.
Your Traffic Tickets
Tickets are also considered as a big factor for insurance providers. If you are caught overspeeding, then it most likely translates to an increase in your premium. There are even insurance companies who could raise your overall rate, as higher speeds are linked to higher rates of accidents, making you a bigger risk to your insurance provider. Maintaining a good and positive relationship with your provider is imperative to make it easier to talk to them in holding off on the increase. This is also very effective if you have had a clean record in the past and the speeding ticket is an isolated case. Furthermore, enrollment in traffic schools or taking driving courses could also erase traffic tickets off of your record.
Your Accident Claims
Many insurance companies also look at how many accident claims you have filed in the past, regardless if you were at fault or not. If you are liable, and the accident was caused by negligence on your part, then expect your rates to hike up significantly. Furthermore, the more claims that you file with the company; it is likelier that they will tag you as high-risk and also result in a rate increase. It is good to know though, that there are insurance providers who have an accident forgiveness program that lets go of your first accident (which you are liable for), provided that you maintain a good personal and professional relationship with the company, and that you have had a clean driving record before the accident.
Your Risk of Vehicular Theft
Apart from accident claims, insurance companies also look at the risk of vehicular theft when deriving your rate and premiums. There are areas with higher theft rates than the others, and this could cause you more if you live in these areas.
Age, Occupation, Marital Status, and Gender
Other factors considered by insurance companies are the abovementioned – your age, your occupation, your marital status, and your gender. While these seem random and rather irrelevant, you need to remember that insurance providers have to predict how big of a risk you are to their business. Looking at the numbers, drivers in their teenage and senior years are more accident prone than others, which means that these groups could expect to be charged higher. Also, male drivers could pay more than female drivers as the latter drive less and are expected to take fewer risks, lowering the chances of their involvement in an accident. According to studies as well, drivers who are married drive safer compared to single drivers. Also, being employed would suggest that you drive more than someone who does not, which means that you are also in a higher risk of being involved in an accident.
While you may not have any or full control of the factors mentioned above, it is not the case for the type of vehicle you are driving, the deductibles, and any gaps in coverage that you may have. If you drive an older and less expensive car, chances are that your premium will be lower. This is because new cars are most costly to repair and replace, and are also more susceptible to vehicular theft. A car deductible, on the other hand, is the amount that you pay for an accident before the insurance company handles the rest. Lastly, gaps in your insurance coverage could be held against you, regardless of your driving record.