What Affects the Cost of Car Insurance?

What Affects the Cost of Car Insurance?

The first thing Car Insurance Companies do before giving you a quote is to collect information on your vehicle. This is done to determine how much you need to pay for insurance. Sometimes this information can be pulled from the VIN number. Most of the times it is provided directly by you.

The following factors affect the cost of Cost of your Car Insurance premium

The year: The year or model of your vehicle affects your car insurance rate. Newer vehicles do sometimes get new car discount depending on your car insurance company.

Make of the car: car manufacturing company also affect the cost of your car insurance. Often, foreign cars cost more to insure because it cannot be easy to get the parts and less body shops may work on them.

The Model: The fancier your car, the more expensive it will be to insure. Base model four doors are often the cheapest way to go, and this is not only when purchasing the vehicle but also when you go purchase insurance.

Vehicle Safety Features: car Insurance companies love air bags. They are trusted and proven to protect the driver and passengers. Car Insurance coverage on old vehicles with no airbags can be a bit expensive than on vehicles with airbags. The medical costs of a vehicle correspond to the safety of your vehicle.

Car Alarm: Almost all car insurance companies offer discounts for an alarm if you select comprehensive coverage on your insurance policy. Since comprehensive car insurance covers stolen cars, the alarm discount is only applied to the cost of comprehensive coverage. The savings is normally not much, but it depends on your vehicle value and where you live.

Insurance Coverage Purchased: It is obvious the more coverage you want the higher will be your Car insurance premium. It is important to determine what insurance coverage you need. Ask for advice if you are struggling with deciding on the right coverage.

Driver Factors

Car Insurance companies use a lot of different information on drivers to calculate the cost of insurance. Insurance companies can run reports to obtain your personal information using your driver license number, birth date, or address.

Your Age: Your age influences the cost of car insurance. All car insurance companies decide on what age gets a discounted rate. 25 years seems to be the magic age insurance companies say you are eligible for a preferred or discounted rate.

Driving Record: Car Insurance companies don’t have much to go on when it comes to this factor. Their only source of info is your driving record. The amount you pay for car insurance will directly correlate with your driving history including accidents and traffic violations.

Number of Drivers: Adding a second driver to your car insurance could affect your premium. Having more drivers than vehicles can be a good thing due to the fact that extra drivers can be listed as occasional drivers instead of a regular driver.

Financial Stability: Many insurance companies use your credit score as a basis for your insurance rate, so you better take care of your credit score. The better your credit score the better your car insurance rate.

 Home Ownership: Owning a home plays a role in how much you pay for car insurance. Most insurance companies offer a homeowner’s discount. Insurance companies look at homeowners as being more stable and of lower risk.

Where You Live: Location also affects your car insurance. Living in an area with high claims history or ratio will affect your insurance rates. High theft or high areas are the even worse. Sometimes rural areas can pay more because of high community strikes.

 Your Education: Some car insurance companies offer discount for your level of education. The higher your education level the better the discount. Anything that shows responsibility to a car insurance company is typically assigned a discount.

Car Insurance Company Factors

The cost of car insurance is also affected by how the insurance company operates its business. Is it a public or private company? How many employees do they have? And most of all, how much money has been paid out in claims?

Profitability: Each car insurance company ideals with its own profitability issues. This the factor that makes car insurance company’s rates different. Other factors like profitability like weather, investments, and underwriting also affect rates.

Payment Plans: Car Insurance companies offer different payment plans. Make sure you check for savings by changing your payment plan whether with your current insurance or if you are shopping for a new insurance company.

 Length of Time Insured: As an extra incentive, most car insurance companies offer lower rates to clients who stayed with them for long. This can be a minimal discount but still helps in the long run.

State Laws: Car insurance companies must abide by the state laws. This means you can’t go lower than your state’s minimum limits.