Are you planning on getting car insurance? Many car owners are surprised when they find out about the amount of premiums for their car insurance policy. So, before availing of car insurance, you should understand the basics of car insurance. Aside from searching the internet, you can also hire an insurance adviser to help you understand more about car insurance.
But, of course, there are some things that you should be aware of before finding the right insurance adviser and provider. One of which is the factors affecting your car insurance rate. In this article, we’ll discuss some of these factors so that you can have an idea of why car insurance rates vary.
1. Driving Record
How’s your driving? Do you have some records of driving violations? Usually, car insurance providers check various details of your driving record. Some of these include traffic violations (including reckless driving, DUI, and speeding). In terms of accidents, insurance providers often check whether it’s your fault or not.
Of course, the more accidents you’ve had, the more expensive car insurance premiums you will be offered. This allows you to afford the cost of accidents that may happen in the future. At the same time, the insurance provider will assume that you’ll file claims often.
2. Age and Driving Experience
Less experienced drivers have a higher probability of getting into accidents. So, aside from your actual age, the insurance provider will also check your driving experience. For instance, if you’re 30, but you just got your driver’s licence, a 25-year-old with 7 years of driving experience can have a lower car insurance premium rate compared to you.
At the same time, if you’re too old to drive, even if you have a lifetime of driving experience, your premium can also go up due to various factors, such as blurry eyesight and slow reflexes.
3. Location, Location, Location
Where are you driving? Whether you’re located in an urban or rural area can also affect your car insurance rates. When considering location, insurance providers often look at the crime rate, weather conditions, population, and car accident rates in the area.
For instance, if you live in the city, and there are high rates of car vandalism and theft in that area, expect your car insurance premium to be high. On the other hand, if you’re in a friendly suburban neighbourhood where people look out for each other, you can expect a lower premium rate.
4. Type of Vehicle You Own
The type of vehicle you drive also impacts the car insurance rate. High-performance cars usually need a high insurance premium since they need a lot of money for repairs in case of accidents. Meanwhile, if you’re driving a regular vehicle, the insurance provider also looks at the safety features, vehicle model and make, cost of replacements and repairs, and its overall current performance.
5. Coverage and Deductible Preferences
Although there is basic coverage for car insurance, it’s best to choose the options that can significantly help your case. When you hire an insurance adviser, they’ll assess your risks and let you know the types of coverage you need. If you focus on getting the coverage that suits your needs, you can get the comprehensive insurance coverage you deserve.
Meanwhile, when it comes to the deductibles, it depends on your current financial status. If you can afford to pay for high premiums, then you can opt for low deductibles. On the other hand, if you prefer paying high deductibles, you should get low premium rates.
6. Credit History (Depends on the Insurance Provider)
Many insurance providers are also looking into their clients’ credit history. Oftentimes, based on statistics, if the credit history is good, the client is less likely to file claims. On the other hand, those people with a messy credit history usually file claims as often as possible.
Although not every insurance provider checks the credit history of every client, you should check with your prospective provider first, so that you won’t be surprised as to why they’re requiring a copy of your credit history.
7. Mileage and Usage of the Car
If you drive often, there’s a chance that you’ll be offered high premiums. On the other hand, if your car has low mileage, it’s easier to get a cheaper car insurance premium with comprehensive coverage.
8. Gender and Marital Status
Based on statistics, gender and marital status also have something to do with accident rates and insurance claims. Usually, young male drivers pay higher rates than young female drivers. On the other hand, married individuals come with low risks, usually because some of them have kids, and they take extra care when driving.
9. Discounts You Qualify For
Some car insurance providers also provide discounts that can significantly help lower your insurance rates. Some of the most common discounts include safe driver, bundled policies, and if you’re using anti-theft tools. So, before signing your policy, ask the insurance provider about the possible discounts you may be eligible for.
Final Thoughts
Car insurance rates are influenced by a combination of various factors. By understanding each factor, you’ll also understand why the quotation given to you by the insurance provider is a bit higher or lower than expected. So, when looking for a car insurance provider, it’s best to know the breakdown they follow when computing the policy rates.
