Car insurance is very essential for driving. You will be able to take out your car from anywhere by paying a small sum of money. This makes it easy and cheap to get your car insured at any time. Car insurance can protect you from huge expenses which can occur when you are using your vehicle. It covers the payment of all liabilities arising from the use of your vehicle or injuries caused to you, others while using the vehicle. It also provides protection against damage to the property of others. The car owners can go for different policies according to their needs. You should always look for the best possible insurance package to meet the exact needs of the driver.
And then you can get a perfect auto coverage policy for your car. You must have your car insured as it is an expensive thing and a loss to you if it gets into a mishap. Car insurancepolicy protects people from unexpected damages that may occur in case of an accident. However, there are other things such as damage or theft of your property, a medical emergency, and a death in your family that may occur if your car is not covered by insurance. Even though car insurance is mandatory for driving it is wise to purchase coverages for these eventualities so that you can be protected from financial losses. Here are some common that determine your auto insurance premium costs.They include;
1. Your Driving Records
Your driving record is one of the most common factors that affect the price for your car insurance. No matter how careful you are on the road, it is impossible to avoid all the traffic tickets and accidents. This will eventually reflect on your premium amount. So, make sure your driving history is clear. Also, pay attention to the details of your policy like whether it provides unlimited or limited coverage, what kind of coverage do you need, what deductible should you select, what discounts are applicable to you and many more. By paying attention to these details, you can end up saving a significant amount of money.
2. The type of vehicle you drive
The type of vehicle you drive is another important factor that affects the price of your car insurance. If you drive a larger car, it will cost more to insure than a smaller car. Likewise, if you drive an older car it will also be expensive to insure. Newer cars are much cheaper to insure because they have fewer mechanical problems and are generally well-maintained. This is why you must always check your vehicle’s year, make and model when you are buying a policy.
3. The amount of coverage you have purchased
Another factor that affects the price of your car insurance is the coverage you have selected. You should always select the highest level of coverage for which you are eligible. It is better to have too much coverage than too little. Insuring your car with low limits will leave you vulnerable in case of an accident. On the other hand, if you select high limits then you may end up paying extra for “excess” coverage which pays for the damages to the other party, their property and injuries to them and their passengers.
4. Deductibles selected
The deductible is the amount you will have to pay before your insurance company pays for the damage or loss. Usually, you will be required to pay a small portion of the claim yourself and the rest will be paid by your insurance company. But beware! Choosing a higher deductible can work against you because a major accident or damage might not be detected immediately. Therefore, it will delay the process of sending you a bill and thus, increase the chances of your insurance company will raise your premium. So, always select a deductible that is low enough to give you piece of mind but still offers you adequate protection against unforeseen expenses.
5. Where you live or work
The location of your home or place of business has a direct effect on the price of your car insurance. If you reside in a dangerous neighborhood with reckless drivers, then your premium will reflect that. Likewise, if you work at a place where there are a lot of accidents, then it will also increase your premium. On the other hand, living in a “safe” area will generally lead to lower premiums. But, do not make this assumption because it is not always true. Sometimes, “safe” areas have more traffic accidents than “unsafe” ones because people drive carelessly there too.
So, if you reside in an area where the cost of car insurance is high, it does not necessarily mean you are paying because of bad driving. It could be because your home or place of business is located in an area with more traffic accidents. In this case, you should find out exactly why your premium is so high and take necessary steps to ensure it does not get higher.
6. Your age
Younger drivers have to pay higher premiums because they are statistically more likely to be involved in a collision. However, as you turn older your premiums will decrease. This is because older drivers are less likely to be involved in a collision.
7. Your marital status
1. Married drivers usually have lower premiums than single drivers. This is true because married couples tend to modify their habits to avoid driving at night and during bad weather. They also exercise more caution when driving than single people. On the other hand, if you are divorced or separated, your car insurance premiums will be higher. This is because your marital status is considered a “risk factor” by insurance companies. They believe if you are separated or divorced, it is more likely that one or both of you will get into an accident. Therefore, you will make higher claims and this will result in higher premiums.
8. Miles you drive per year
The more miles you drive, the higher your premiums will be. But again, there is a limit. The insurance companies have a limit on how much mileage they will factor into their calculations. For example, if you drive 100 miles every day of the week except Sunday, then they will consider you a very low mileage driver. On the other hand, if you drive just 2,000 miles per year, they will assume that is a high amount of miles you drive and increase your premiums accordingly.
In conclusion, the cost of your car insurance can carry due to several reasons. The above discussed are some of the top things that affect the cost of your car insurance. However, there are many other reasons. Always make a list of all the factors that affect the price of your car insurance, because it can help you understand why your premium is higher than expected. This way you will be able to take action to reduce your costs.