Ever wonder what makes up that seemingly magic number you pay for auto insurance? The price of coverage for you and your vehicle can seem like an arbitrary number, but there are several factors that every company uses to determine the premium. With these items in mind, you can be aware of what to expect when buying your next car! Or, if you’re a first time buyer looking ahead from searches for “easiest traffic school online” to the day you pass and get your license, it’s important to know the factors that will affect the other prices you’ll be seeing down the line. Buying that red sports car may not just increase the heads you turn as you drive down the block. On the other hand, some companies offer a low mileage discount to consumers who clock smaller driving distances. Below are what the Insurance Information Institute (III) identifies as factors that most companies consider when pricing your auto insurance policy. Some items may surprise you.
1. Where You and Your Car Live
It’s not just about what part of the country you call home; insurers consider where you park your car. Not only does your zip code makes a difference, but often whether the car is parked overnight on the street or in a garage will make a difference.
2. Years of Driving Experience
Both the youngest and oldest drivers see higher rates from this factor due to a larger risk of fatal crash rates. Generally, until you are considered an elderly driver, these rates work in your favor as you gain years of experience.
3. Make, Model and Year of Your Car
Not all vehicles are created equal. Not only are some cars safer for occupants, but certain cars are also more frequently involved in accidents or cost more to repair. Some cars may even have higher basic car repair needs which cause your annual premium to jump. Seek out safety and vehicle ratings for the best options, or know that your premium may increase if a car has proven to be more of a risk.
4. A Credit-Based Insurance Score
Although not all states allow this as a determining factor for auto insurance, it can still be considered. Studies have repeatedly shown that there is a correlation between credit scores and accident frequency. In Florida your credit score will affect the cost of your insurance, for the better if it’s a strong score or vice versa.
5. Type of Coverage Needed
This seems like a no-brainer, but the coverages you choose will impact the rate. The cost may be necessary to obtain the best coverage for your driving needs. It’s important to make sure you have your family properly covered. That’s why it could be worth comparing different car insurance firms with somewhere like State NZ to make sure that you are getting the best deal for you and your family. Agents or ads promising lower rates often rely on taking away the protections you really need. Don’t fall prey to that! Just like the cars insured, no two drivers are alike. However, basic policy premiums rely on these key factors to assess a driver’s risk. Auto insurance is a necessity, but it doesn’t have to be a mystery.
Contact us with questions about your coverage needs by calling or emailing our office. We’re happy to talk with you about your insurance policy.