The nuances of auto insurance has always made little sense to those on the "outside" of the business. Here are some basic guidelines for what determines your auto insurance rate and how you can help save money on your policy.
When it comes to auto insurance, there's a lot of factors to consider on both your part and your agent's, and at times it can be overwhelming or downright inexplicable. Some companies will give you a certain rate that seems completely outrageous, or your average, decidedly non-sporty sedan may have a premium that is way too high for the kind of vehicle it is. Today we'll be going over some of the factors that go into determining these rates, and what you can possibly do to lower them as best as you can.
The first and foremost factor for many states is your location, which determines the safety of your daily driving habits as well as your risk level when you commute and travel. In some states such as California, there are limitations on the impact of your location and how it can affect your policy. Although California primarily considers your driving record and mileage as means of determining your rates, your location is an undeniable factor as well. Studies from various national providers with aggregated data have proven that even a difference of 50-100 miles can have a significant effect.
Granted, for most people, relocation to lower their auto insurance rates isn't exactly the most feasible option. But everyone's circumstance differs, and if you just so happen to be in such a position before renewal, it's something to consider. Alternatively, if you plan on moving soon, keep the insurance rates in mind as one potential factor that can weigh down your cost of living.
Another key factor, of course, is your driving record itself. No matter where you live, if your record is poor your rates will be higher, simple as that. For this, there isn't much else to recommend except to stay safe on the roads. Accidents will happen and are unavoidable, but as long as you do your part to drive safely and defensively, particularly in the more aggressive urbanized areas, you can reduce the risks you take daily. Most companies have incentives and discounts for good driving records, saving you hundreds of dollars annually if you qualify.
One of the most unexpected factors can also the kind of car you're driving. While this may seem obvious, sometimes the most mundane car may have surprising rates. One would typically expect an expensive import or a high-end sports car to have high premiums, not an average sedan. However, rates are not only determined by the cost of repair in the event of an accident, but the vehicle's loss history as well. In other words, if a specific kind of car has a lot of claims filed by other drivers, the rate will increase even if that vehicle has a reputation for being safe or uninteresting.
Once again, we come to a situation where your individual circumstance is important. Some people don't like to own cars and prefer to lease the latest, which will invariably keep their premiums higher. Others do as much as they can to keep their cars in use as long as possible, which will inevitably cause rates to lower as the risk decreases over time. If you're in a position to buy a new car, the insurance rates are something important to keep in mind as part of your ongoing cost of ownership.
Ultimately there are dozens more factors involved and the ones we just went over only touch on the tip of the iceberg. Be sure to speak with an authorized insurance agent and go over exactly what your situation is and request a quote. Once you've done that, don't be afraid to shop around and ask three, four or even more other providers. Since everyone calculates their rates differently, you'll never know if you're getting the best pricing you can without a fair bit of legwork.
