How is the price of your car insurance determined?

The average price of car insurance is derived from several factors. Many of these variables are well known and make sense for the most part, but it’s always a good idea to brush up on what insurance companies look for when determining how much your coverage will cost.

Driving record – The price of your car insurance is determined based on 6 key areas. The first is your driving record. The most important thing to remember is the better your driving, the lower your overall cost to insure your car. This includes car accidents, speeding and believe it or not if you have been without insurance for several years. The good thing is that you can control many of these factors directly. Focus on keeping a clean driving record and this area should not make your fares excessive.

Cover Amount – Do a self-check and call your insurance company to see how increasing and decreasing your deductible and amount of cover will impact the price of your insurance. By increasing the deductible, you decrease your monthly amount. Increasing the deductible has the opposite effect. The same applies to the actual amounts of cover.

Age – Case study has shown that younger drivers cause more accidents than older drivers. This potential to be involved in a collision is the result of inexperience behind the wheel of a car. In general, most insurance companies charge more for people under the age of 25.

Vehicle Model and Mileage – If you’re interested in that nice new sports car, you may want to find out how much it affects the price of your auto insurance. Largely due to theft, vehicle costs and safety records, some cars score a higher premium than others. As if it weren’t bad enough, the number of annual miles you put on your vehicle by driving can increase your car policy. The average used is 10,000 miles in a year. If you exceed that total, you can expect a rate increase based on your increased chance of being involved in a car accident.

Your Home – It’s a pretty safe bet that you’ll pay more for your car insurance if you live in a big city compared to a nice farm in the countryside. The city is likely to have more thefts and accidents, leading to higher costs that are absorbed by the insurance company and then passed on to the consumer when the insurance companies determine the price of your car insurance.

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Hopefully, this information can help you focus on some areas within your auto policy that you can review with your insurance agent in the hopes of actually lowering your auto insurance rates rather than increasing them.