In the United States, car insurance is mandatory for all drivers. Insurance policies protect you and your car in the event of an accident, theft or other covered disaster. Auto insurance premiums are paid monthly or yearly and cost drivers about $545 on average in 2018. These costs may seem high, but they help cover the cost of repairs if you cause an accident, medical expenses if someone else is injured in your car and more. However, depending on where you live, rates can also be much higher than this national average. That’s because insurance companies use a variety of factors to determine how much to charge you for auto coverage. The type of car you drive, your age, gender and past driving record are just some examples of information used to calculate your premium. Here’s a closer look at some common variables that may increase your car insurance rate:
Check Your Credit Report
Your credit report makes up about 35 percent of your overall insurance score. A lower score means that you’ll be charged a higher premium, so you may want to check your credit report and get any errors corrected.If you have derogatory information on your report, such as a bankruptcy, tax lien or credit card debt delinquency, you may be denied coverage or forced to pay a higher premium. If you have good credit, though, you may qualify for a discount.Your credit report is also used for life and health insurance, so make sure it’s accurate before applying for any of these types of coverage.
Your Car’s Make and Model
Your car’s make and model will play a major role in determining how much you pay for car insurance. This is because insurers set rates based on the cost of repairs, replacement value and frequency of theft. While the make and model of your car are important, it’s also important to keep up with maintenance and follow the recommended service schedule.If you neglect regular service, your car will be more expensive to insure and could result in a lapse in coverage. If you drive a classic car, you’ll likely pay more for auto insurance, but you can often get coverage with more comprehensive benefits.
Your Age and Gender
Age and gender play a major role in how much you pay for car insurance. This is because younger drivers and males are more likely to be involved in accidents. If you’re under 25, you’ll likely pay more for car insurance, regardless of your driving record. This is because you are statistically more likely to be involved in an accident. When you reach age 25, your premium will drop.If you’re a woman, you may qualify for a discount. This is because women statistically drive less and have lower accident rates. Your premium will drop again once you turn 65. This is because senior citizens are less likely to be involved in accidents.
Your Driving Record
Driving record makes up about 50 percent of your insurance score and directly affects your premium. The better your driving record, the lower your premium will be.If you have a clean record, you may qualify for a good driver discount. If you have a few minor violations, you may be eligible for a conditional discount. You may also be required to pay higher premiums if you have a poor driving record.
Where you live
Where you live also plays a role in determining how much you pay for car insurance. This is because insurance companies set rates based on the cost of living in your area. If you live in a high-risk area, you may be charged a higher premium. If you live in a low-risk area, you may be charged a lower premium. If you can’t afford the high premiums, consider moving to a less expensive area.There are many factors that determine the cost of auto insurance. The good news is that there are many ways to lower your premium. Here are some ways to reduce your car insurance rate:- Maintain a clean driving record – If you have a few minor violations, you may be eligible for a conditional discount.- Add a teen driver to your policy – Adding a teen driver to your policy can reduce your premium.- Raise your deductible – Raising your deductible can reduce your premium by as much as 20 percent!- Install anti-theft devices – Anti-theft devices can reduce your premium significantly.- Bundle your car insurance with other policies – Bundling your car insurance with home or life insurance will usually reduce your premium.
Final Words: Finding the Right Auto Insurance Plan
When you shop for auto insurance, be sure to compare rates from several companies. Also, be sure to review each company’s coverage options and policy. Doing so will help you find a plan that meets your needs at a price you can afford. If you simply go with whatever company offers you the cheapest rate, you could end up overpaying.There are many factors that determine the cost of auto insurance. The good news is that there are many ways to lower your premium.