As you fill out your insurance quote form, your insurance company collects information that they use to estimate your risk profile and determine your car insurance rates. Typically, a high-risk profile means higher insurance costs and vice versa. Therefore, if your car insurance premium quote is unusually high, it could be that the data collected by your insurer indicates that you’re a riskier client, or the insurer may be analyzing risk in a way that doesn’t work in your favor. Here is some more information on factors that may affect your car insurance premium.
Auto Insurance Premium Factors
Your Car
Insuring some types of cars costs more. If your insurer’s data suggests that the type of car you are insuring is likely to be involved in more accidents or have more claims, your insurance will cost more. Conversely, cars that come with fewer risks cost less to insure. Insurers usually consider the following when evaluating your car:
- Purchase price
- Cost of repairs
- Theft rate
- Safety tests
Your Driving Habits
- Driving Record – If your driver’s history is clean, you may be eligible for safe/good driver discounts, which would lower your insurance costs. Conversely, drivers who have moving violations (DUI, speeding) or an accident on their record are riskier to insure and typically pay higher rates.
- How Much You Use Your Car – If your car usage entails long commutes to work, you may pay more for your insurance than someone who only takes short drives on the weekend when running errands. The more miles you drive, the more exposed you are to risks, says the Insurance Information Institute (III).
Demographic Factors
- Your ZIP Code – Where your home is located and where you typically park your vehicle overnight impacts your auto insurance rates. Urban locales usually face higher risks of theft, vandalism, and accidents than rural areas; this means the auto insurance rates may be higher.
- Age – Younger and less experienced drivers are more likely to make errors on the road, which increases their risk of being in an accident. Driver insurance premiums begin to decrease after the age of 25. On the other hand, senior drivers (over the age of 65) are not only more likely to be in auto accidents but also more likely to be seriously injured in a crash, according to the International Risk Management Institute, Inc (IRMI).
Claims Record
Making at-fault claims may lead to you paying more for your insurance. Moreover, the number of your claims also affects your car insurance premiums. For instance, if in three years you have made three claims, your insurer may consider you a risky client and increase your premium or choose not to renew your policy.
Type of Coverage
States typically set their minimum auto insurance coverage requirements. The more coverage you’re legally required to carry, the more your policy will cost. Moreover, adding riders and supplemental coverage to your policy will increase your insurance costs.
Limits and Deductibles
Your limit is the highest amount your insurance policy will compensate you for covering a loss. Usually, each coverage in an auto insurance policy comes with its own limit and you can adjust it to suit your needs. In general, higher coverage limits mean higher insurance costs. A deductible is the amount a policyholder pays out of their pocket before their insurer pays for a given covered loss. Generally, higher deductibles translate to a lower premium.
Auto insurers typically use these factors to determine an applicant’s risk profile, meaning these factors may affect your auto insurance premiums. To find the best auto insurance coverage for your needs, visit the professionals at McCarty Insurance today. We are here to help you understand the ins and outs of your chosen policy.
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