Factors Affecting Auto Insurance Premiums

Many people face rising auto insurance premiums every year without knowing how to stop the increases. There are a number of factors that can negatively affect the premiums paid for auto insurance. Knowing these factors and managing them can make a big difference when it comes time for your policy renewal.

The make and model of your car has a major influence on your premium. In many cases, more expensive cars are more expensive to insure. This is because replacement parts and labor are more expensive. Safer cars, even larger ones, can lower the premium because 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 will increase your premiums, and too many accidents can result in a policy not being renewed. Traffic fines not only cost you money when they are incurred, but they are also tracked by the insurance companies. Drivers who get tickets are considered a higher risk and cost more to insure.

In most cases, cars get cheaper to insure as they get older. At some point, the replacement cost of an older car is so low that collision coverage is not necessary, as the premiums would be higher than the cost of buying an identical car of the same age.

The number of kilometers driven in a year is a question that insurers ask. This is because a car parked in the driveway has a much lower risk of having an accident than a car parked in traffic. People who work from home and drive just for fun will save a lot more than people who commute twenty or thirty miles or more every day.

Likewise, a car owner who lives in a rural area will have lower premiums than someone who lives in a heavily trafficked urban area. This is not only due to an increased risk of accidents in urban areas, but also to higher car theft rates in urban areas. Some people in urban areas incur very high transportation costs, including parking fees, and some decide to rely entirely on public transportation.

A driver’s age is another factor in determining fares. Younger drivers are more expensive to insure because they cause more accidents than older drivers. Older drivers are safer and more experienced drivers in most cases. These higher rates can be offset somewhat by having all drivers in a household on the same insurance, creating a multi-driver discount.

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Every driver needs insurance, but hopes never to have to use the insurance coverage. By taking the time to understand the factors that increase auto insurance premiums, consumers can save a lot of money on insurance.