If you’re hoping to save money on car insurance, it’s important to first understand how your premium is determined, and how dramatically these premiums can vary. Here are some of the factors that can influence how much you pay:
Your driving record
Your record plays a crucial role in determining premiums. If you’ve been involved in an accident that was determined to be your fault, or if you have traffic convictions on your record, you may pay more for your insurance. Statistics indicate these types of drivers generally have repeat accidents or violations within three years. For drivers with poor records who cannot find coverage, there are state-regulated insurance plans called “assigned risk pools” or “shared markets.” In these plans, the state assigns a company to provide coverage for a high-risk driver.
The car you drive
Certain car models may be considered higher risk because they cost a lot to repair, are frequently involved in accidents, or are popular with car thieves. Owning one of these cars may double your collision and comprehensive premiums. High-performance and sports cars, for example, usually cost more to insure. Keep this in mind when shopping for a car – you can ask your insurance agent about insurance premiums for specific cars before you buy.
Statistically, young married drivers have fewer accidents than young single drivers, so they generally pay lower premiums.
Where you live
Rates are regulated on a state-by-state basis – so, rates in California and rates in Rhode Island will differ. Rates also vary between locations within a state. The risks of accidents, theft and vandalism change significantly from one community to another. For example, people living in small towns generally have fewer auto accidents than people living in large cities, so they may pay less for insurance. Other variables include average regional weather conditions and local auto repair prices.
As a general rule, since drivers under the age of 25 have more accidents than older drivers, they pay more. Drivers between 50 and 65 years of age have low accident rates and are sometimes offered discounts. Past the age of 65, accidents seem to increase and rates generally begin to rise again. Someone over 70 may have trouble finding an insurer to accept them as a new customer, and when they do find coverage, it may be expensive.
A young man under age 25 generally pays more than a woman of the same age. Young men are typically involved in more accidents than young women and have more than three times as many fatal accidents.
Your family members
Insurance premiums not only reflect your own age, gender, and driving record, but those of other licensed drivers in your household as well. A teenage son who drives your car or a spouse with a poor driving record will likely increase your insurance premium.
If you’re looking into car insurance, there are some things you can do to help bring costs down:
- Get quotes from at least three different companies to compare prices, features, and services.
- Choose a safer vehicle. Safety ratings can dramatically affect the price of insurance, so research the vehicle you’re considering. See if the vehicle has a high accident rate or is popular with thieves.
- Increase your deductible if you know you can handle the out-of-pocket expense in the event of an accident. Increasing your deductible to $500, rather than the standard $250, would cut the cost of your insurance. But it will cost you an additional $250 out of pocket in the event of an accident.
- Drive safely and responsibly. Obey the speed limits. Don’t drink and drive, and always wear your seatbelt. A good driving record helps keep premiums down.
The following discounts can also cut costs. But they are not necessarily permitted in all states and are not offered by all insurance companies.
- Safe driver discounts. The definition of a safe driver varies, but usually includes those with no accidents or convictions on their records for the previous three years.
- Discounts for taking driver training, driver improvement, and/or defensive driving courses. You may qualify if you’ve recently taken an approved driver education course. The National Safety Council offers several courses in English and Spanish for both mature and teenage drivers.
- Mature driver discounts, for drivers between ages 50 and 65.
- Multi-car discounts, for those insuring more than one car with the same company.
- Multiple policy discounts, for buying more than one type of insurance (e.g., homeowners, auto, life) from the same company.
- Restricted mileage discounts, for those who drive fewer than 7,500 miles annually.
- Antilock brake discounts, for cars equipped with computerized antilock braking systems.
- Passive seat belt and air bag discounts are sometimes offered for cars equipped with factory-installed air bags and automatic seat belts.
- Antitheft system discounts, for vehicles with devices that make them more difficult to steal — for example, ignition and fuel cutoff systems, alarms, and hood- and wheel-locking devices.
- Good-student discounts are sometimes offered for drivers under age 25 who have maintained B averages for the preceding semester in high school or college.
Finding the right car insurance is an important responsibility. Knowing what to expect and how to find the best coverage at a great value will ensure you make the right decision.