Car insurance rates are a very serious issue for many people. We would all like to reduce the amount of money we spend on such things while still keeping ourselves safe. However, trying to reduce your costs can be a frustrating experience. The methods that insurance companies use to determine your rates can seem arcane, and sometimes it is not clear to people why their rates are so high. In truth, there are numerous factors that contribute to the final price quote, and understanding what they are can make it easier to understand why your quote is so high and how you might go about reducing it.
Perhaps the simplest aspect of car insurance rates to understand is the declared value. This is simply the total value of your vehicle. A brand-new car right out of the showroom obviously has considerably higher value than a used model that has been on the road for ten years. This value is significant because it is what the insurance company is expected to pay you in the case of a total write-off. If the declared value is very high, your insurance rates will tend to follow suit. For this reason, used cars are often cheaper to insure than new ones.
Beyond the age and value of the vehicle, its make and model can have a significant effect on your car insurance rates. Insurance companies know that certain types of car tend to be involved in accidents more often than others. Powerful sports cars are a prime example. If your car has a high performance rating, a powerful engine and is intended for sporty driving, don’t be surprised if you pay the price not only in its initial cost, but also with your insurance. Note that the performance of your car is determined separately to its age, so even an older model that is not worth much may command a hefty premium if it is very fast and potentially dangerous.
The way you use your car also has significance in a couple of different ways. Firstly, you need to consider how much you drive. It is unfortunately a fact that the longer you spend on the road, the more likely you are to be involved in an accident. For this reason, some companies will take into account the number of miles you drive on average each year.
Another aspect of your driving that is taken into account is your history. Insurance companies pay a lot of attention to how often you have been in accidents in the past, and will increase your car insurance rates if they consider you a liability. This may be unfortunate, but you can help yourself to save money by retaining as much of your no-claims discount as possible. This will demonstrate to your insurer that you are reliable and responsible and no more likely to have an accident than anyone else. Note that speeding tickets and DUI convictions may also be taken into account, even if no accidents result from your driving.
The area in which you live is also a significant factor in your car insurance rates. Not only do different parts of the country entail subtly different rates, but the specifics of your home may also be important. For example, rough city neighborhoods may command far higher premiums than sleepy suburbs. You should also consider where you keep your car. Keeping it in a lock-up garage is considerably safer than parking it on the street and this is an important factor for insurance companies to consider.
Many other details are also taken into account when calculating car insurance rates. Your age is one example. Older drivers with more experience typically receive vast discounts compared to brand-new license holders. In some cases, your marital or cohabitation status may be taken into account. Your employment and education are also important factors, as those jobs and degrees that typically demonstrate responsibility may help to reduce your costs. Note that you can often reduce your premiums in miscellaneous ways, such as by purchasing package deals and moving all of your insurance to the same company.
There are many different factors that play a part in deciding your car insurance rates. Insurance companies like to look at every possible piece of evidence they can find when determining your quote. Different companies may value different aspects with greater or lesser importance, so it is important to shop around and get multiple quotes before choosing one. However, by far the best approach you can take is to act based on the major factors listed above. Choose a sensible and inexpensive car, live in a safe area with a lock-up garage, drive safely and maintain a clean history, avoid tickets or felonies and limit the number of miles that you drive and you will greatly reduce your costs from year to year.
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