Car Insurance Costs: Factors that Contribute to Your Payment
You probably are aware that there are many different factors that go into setting your car insurance rate. However, do you know what all those factors are? Here are four of the most important.
Driving Record
A safe driving record will result in lower rates while a problematic record will cause rates to be much higher.
This is one of the most ironclad rules of car insurance and usually one of the single biggest factors in determining your insurance rates.
A safe driving record does not only mean a lack of accidents—it also means a lack of moving violations as well.
Certain serious moving violations, such as a DUI, will affect rates much more than a minor violation like a speeding ticket.
Claims History
The number of past car insurance claims will play a role in your current rates.
This makes sense—if a driver proves more costly to the insurance company by making claims, the company will consider that driver a higher risk and thus charge them accordingly for coverage.
This leads many drivers to think twice before filing a claim with their insurance company. In many cases it may be more cost effective to simply pay the sum out of pocket.
Vehicle Type
The make, model and age of your car will also factor into your car insurance rates. Newer cars tend to have more safety features designed to prevent accidents and injuries.
These features can lower insurance rates because they help mitigate the possibility of insurance payouts.
Age plays a role because the older a vehicle is, the more likely there will be something wrong with it that could cause a costly payout.
If you are getting a new vehicle, be sure to get an auto insurance quote before you buy so you will know how your rates will be affected.
Location
Location plays a big part in insurance rates of all varieties. Drivers who live in major metropolitan areas, for example, are considered more likely to get into an accident and thus pay higher premiums for insurance.
By contrast, a rural area has less cars and congestion and is seen as a lower risk by insurance companies.
Your zip code will also tell insurers other information that will affect your rates, such as the frequency of car vandalism, inclement weather, driving accidents and more.
All of these factors are considered in your car insurance rates, but they are not all given equal weight.
Unfortunately, it can be hard to predict which factors will carry more weight because each insurance company determines that individually.
Either way, if you are careful and practice good habits behind the wheel, you can get reasonable insurance rates.
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Category: Insurance
