Common Factors That May Influence the Price of Your Auto Insurance Policy
Thinking of “cutting corners” on coverage to lower your auto insurance premium? While coverage and deductible levels play a part in your overall premium cost, there are several other factors that may be used when calculating your premium. Don’t be too quick to change things that are “easier” to change, such as coverages and deductibles. Instead, review the following common factors that contribute to the price of your auto insurance policy and direct your efforts toward improving your driving record, lowering the amount of miles you drive, and storing your vehicle in a secure area if you live in an urban setting. Beyond that, other factors that influence the cost of your premium could vary by state and insurance company, and others yet are beyond your control, such as age and gender. The most common factors that influence your auto insurance policy include:
- Your driving record. Yes, accidents and serious traffic violations do impact your insurance premium. This type of activity suggests you may be a more risky driver, therefore increasing the chances that you’ll have more accidents. The concept of insurance means that everyone pays a portion of the costs to cover everyone insured within the same insurance company (e.g. pooling). To maintain a level of fairness, drivers who have more accidents and serious traffic violations are typically charged more in the form of premiums. This helps keep costs down for insureds with a clean driving record. Keep in mind, new drivers with little-to-no driving experience may also pay higher rates based on statistics for young driver age groups.
- How much you drive. The more miles you drive your car to work and for regular use, the more you increase your chances of being involved in an accident. Your auto insurance premium may be higher if you commute long distances or if you have a higher-than-average number of miles driven in total, compared to industry standards. If you only drive your car occasionally, you may pay less for your auto premium.
- Where you park or store your car. Crime rates, such as those for vandalism and auto theft, are higher in urban areas than in small towns and rural areas. Therefore, living in or near a city may cause your auto premium to be higher. Your rates may also be impacted by where you store your car when you are not driving it. Parking it on the street in a city may cause your insurance premium to be higher than someone who parks his or her car in a secured parking garage, simply due to the chance that the car could be damaged more easily if parked on a street. It is very important that you accurately report the location of your vehicle when parked. Falsely reporting a different address for the purposes of receiving lower insurance rates is insurance fraud. If your vehicle is equipped with anti-theft features, you may notice a difference in the cost for auto insurance, as well.