Many people face rising auto insurance premiums every year without knowing how to stop the increases. There are several factors that can adversely affect the premiums paid for auto insurance. Knowing these factors and managing them can make a big difference when the time comes for policy renewal.
The make and model of your car have a big impact on your premiums. In many cases, more expensive cars are more expensive to insure. This is because spare parts and labor are more expensive. Safer cars, although larger, can reduce premiums, as drivers and passengers are less likely to die or be seriously injured in these cars.
Personal driving history has a dramatic effect on premiums. Accidents can and often increase premiums and too many accidents can result in a policy not being renewed. Traffic tickets not only cost you money if incurred, but are tracked by insurance companies. Drivers who get tickets are considered to be at greater risk and cost more to insure.
In most cases, cars become cheaper to insure as they age. At some point, the replacement value of an older car is low enough not to require collision coverage, as the premiums would be higher than the cost of buying an identical car of the same age.
The number of miles traveled in a year is a question asked by insurers. This is because a car in the driveway has a much lower risk of crashing than a car in traffic. People who work at home and drive just for pleasure will save much more than people who travel twenty or thirty miles or more every day.
Likewise, a car owner who lives in a rural area will have lower premiums than those who live in a high-traffic urban area. This is due not only to the increased risk of accidents in urban areas, but also due to the higher rates of car theft in urban areas. Some people in urban areas incur a very high transportation cost, including parking fees, and some decide to rely entirely on public transportation.
The age of a driver is another factor that determines the rates. Younger drivers are more expensive to insure, as they tend to have more accidents than older drivers. Older drivers are safer and more experienced drivers in most cases. These higher rates can be compensated in some way by having all the drivers of a family on the same insurance policy, thus resulting in a discount for multiple drivers.
Every driver needs insurance, but he hopes he will never need to use insurance coverage. Taking the time to understand the factors behind the increase in auto insurance premiums can help the consumer save a great deal of money on insurance.