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When it comes to auto insurance, many people feel like their rates are a mystery. You pay your premium every month, but where does that number come from? Several clear and measurable factors go into calculating your auto insurance rates. Some of them are under your control — others, not so much. Understanding these variables can help you make smarter choices regarding coverage, budgeting, and even shopping around for a new policy.
Your driving history is one of the biggest factors insurers use to determine your premiums. If you’ve been in a few accidents or have received multiple tickets, your rates will likely be higher. On the other hand, a clean record can help lower your costs.
Why? Because insurance companies view your record as a reflection of how much risk you pose behind the wheel. The more violations or claims you have, the higher the likelihood you’ll be involved in a future accident. When the insurer faces more risk, your premiums may go up to adjust for it.
Your zip code plays a major role in how much you pay. If you live in an area with a high number of accidents, thefts, or claims, your rates may be higher even if you have a spotless driving record. Urban areas, in particular, tend to have higher premiums than rural locations due to more traffic congestion, vandalism, and crime.
Costs also vary from one state to another, too. This is due in part to the ways insurance coverage laws differ across state lines.
The kind of car you drive affects your insurance cost more than you might think. Generally, the more expensive the vehicle, the more it costs to insure. That’s because if it’s damaged or totaled, the insurer may have to pay more to repair or replace it.
Beyond price, some vehicles come with higher safety ratings, while others are more prone to theft. Your insurance company will consider all of these factors.
Do you use your car for daily commuting, or just for the occasional weekend drive? Insurance companies will ask you about your annual mileage because the more time you spend on the road, the more chances there are for something to go wrong.
People who drive long distances every day may pay more than someone who only drives once in a while. If you’ve recently started working from home or using public transportation, it might be worth contacting your insurer to see if they can adjust your rates.
Younger drivers, especially teens, often pay the highest auto insurance premiums. This is because they’re statistically more likely to be involved in accidents. With time and experience, your rates usually go down.
Older drivers may also see higher premiums, depending on their driving habits and any age-related health considerations that might impact safety.
The more coverage you choose, the higher your premiums will be. For example, full coverage insurance costs more than minimum liability coverage alone.
Your deductible also affects your rate. A higher deductible usually means a lower premium, but it also means you’ll likely pay more in the event of an accident.
While many of the factors insurance companies consider will work against you, there are also options for saving money. Most carriers offer a wide range of discounts, which can include:
If you’re not sure whether you qualify for any of these, it never hurts to ask your insurance provider. You may find there are savings you didn’t know about.
Even if you weren’t at fault, filing multiple claims can raise red flags for insurers. A long history of claims suggests higher risk, and your rates might reflect that.
This doesn’t mean you shouldn’t use your insurance when you need it. That said, keep this reality in mind when the time to renew your policy rolls around.
The unfortunate reality is that the best insurance coverage at the right price can’t prevent a negligent driver from running into you. These accidents can lead to out-of-pocket costs, even when you are insured.
Our team of car accident attorneys has been advocating on behalf of the injured for years. If you are ready to get the most out of your claim, contact us as soon as possible to discuss your case.
We look forward to helping you get the recovery you deserve.
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