6 Factors Affecting Your Auto Insurance Premiums

The cost of car insurance premiums varies from one insurance provider to another. While most auto insurance companies will calculate your risk to determine the premiums, they will use different factors to do so. Here are some of those factors that insurance providers use to determine your likelihood of filing a claim.

1. Car Insurance History

Insurance companies often require new drivers to pay higher premiums than seasoned drivers. The reasoning is that new drivers have less insurance information that the insurance company can use to determine risk. 

Your premiums can also be higher if you have a coverage gap in your auto insurance history. A coverage gap is when you don't have car insurance because you didn't have a car or could not pay insurance premiums for your vehicle. 

Even if you have a long car insurance history, your premiums can still be higher. Such may happen when you have a history of causing road accidents or have received a ticket in the past few years. 

2. Location

The risk of accidents varies from one geographic area to another. If you live and drive your vehicle in a metropolitan area, the chances of a road accident are higher due to heavy traffic. Hence, people who live in urban areas are more likely to pay higher premiums. In contrast, most rural areas have low traffic, resulting in lower premium rates. 

3. Car Model

You will pay higher insurance premiums if your vehicle has a high market value and is expensive to repair. The insurance company will also consider the theft and accident statistics for your type of vehicle. Vehicles with a history of accidents or theft will attract high insurance rates from the insurance company. However, the premiums for expensive vehicles can still be lower if the vehicle comes with advanced in-vehicle technology to prevent theft and accidents.

Insurance companies also consider the type of fuel that your vehicle uses. Vehicles that use diesel are more costly and may require more expensive repairs. Hence, insurance premiums for a vehicle that runs on diesel can be higher than that for a vehicle that runs on gasoline or electricity. 

4. Driver Profile

Various demographic factors, such as marital status, age, gender, and financial background, affect your premiums. Teenagers and other young drivers are more likely to cause road accidents. As a result, insurance companies will set higher premiums for young drivers and lower premiums for older drivers.

Insurance companies consider men to be higher-risk drivers than women. That means women pay lower premiums than men. 

If you are single, prepare to pay higher premiums than a married person. The insurance provider may also consider your occupation, education, and home ownership status. 

5. Type of Coverage

Your insurance premiums will be higher if you take more coverage. For example, although comprehensive auto insurance coverage has many benefits, the insurance plan comes with a high price tag. However, the cost should be one of many considerations when choosing insurance coverage.

Although some types of auto insurance coverage may be mandatory in your state, you can customize your coverage. The strategy is to choose the coverage that has direct benefits for you. For instance, you can select a coverage that provides you with a waiver of depreciation once you submit a claim. You can also remove some coverage options, such as explosion, vandalism, and theft, while maintaining collision coverage. 

6. Deductibles

Deductibles are when you agree to pay a specific amount out-of-pocket if a claim happens. Lower deductibles typically result in high insurance premiums. If you want to lower your premiums, choose a high-deductible. However, you’ll need to set aside enough money to cater to the car repair bills if an accident happens. 

While car insurance is mandatory in most states, the specific premiums vary from one insurance provider to another. Mike Pierce Insurance provides affordable car insurance coverage in Arizona. Contact us to get started.