What Factors Affect My Auto Insurance Premiums
Believe it or not, auto insurance rates are not just some arbitrary numbers that insurance companies make up; they are well thought-out calculations. Insurance companies rely on your own personal information and their algorithms to make educated guesses on your likelihood to make a claim. The riskier a person appears to be, the higher the amount they pay in insurance premium. The following are some of the main factors insurance companies consider when deciding the amount a customer pays for auto insurance premiums:
Location - The first thing insurance companies ask for your ZIP code so that they can know where you live. If you live in a densely populated urban area, things, such a congestion and accidents, are more common hence the higher likelihood of insurance claims. The ZIP code also helps insurance companies find out the rate of stolen vehicles in the state where the client lives. All these have an impact on the amount of the premiums.
Age - Without a doubt, the younger the driver is, the more likely they will be involved in an accident. Young, inexperienced drivers have been statistically proven to be immature behind the wheel, distracted easily, and most likely to crash amongst all other age groups. A study by the Insurance Institute for Highway Safety, drivers aged 30-69 are a lot less likely to be involved in an accident. If you manage to keep your driving record clean, car insurance rates will stay fairly flat till you become a senior driver. However, rates may increase when you are over 70 years as seniors are also at more risk of getting into accidents due to poor reflexes. As such, rates for young people and seniors are lightly higher than other age groups.
Gender - If you look at crash statistics in most state, you will find that there I a huge difference between statistics on female and male drivers. Data shows men are much more likely to be involved in an accident as they are known to drive more miles, and engage in risky driving behavior, such as peeing, not using a seatbelt, driving while intoxicated, among others.
Driving record - This is perhaps the most important thing to insurance providers when they are trying to figure out what sort of a driver you are. Your driving record shows how you generally behave on the roads, and records any incidents that may have happened to you such as accidents. Looking at your driving record, the insurer can know how many times you’ve crashed and the details concerning such a crash. With such information, they can know how risky you are and adjust your rates accordingly.
Safety features in your vehicle - Modern car are now armed with a lot of technology, some of which comes into play during accidents to prevent them or reduce the damages or injuries caused significantly. For instance, insurance companies are known to offer discounts for vehicles with more airbags. Other cool tech features such as object detection and avoidance can also help reduce premiums.
Vehicle type - Your car type determines its price, accident rates, cost of repairs, safety rating, among other things that have a direct impact on the amount of insurance premiums.