There are many factors that determine how much you will pay for auto insurance. Understanding these cost factors may help you save money on your car insurance in the long run.
When determining how much you will pay for auto insurance, your insurance company will take the following into consideration:
Vehicle Type- Year, Make and Model
The type of vehicle you drive directly affects your premiums. Owners of newer cars typically pay higher auto insurance premiums as do certain models that are prone to theft. Every vehicle also has a safety rating and specific safety features. Your vehicle’s safety rating may also greatly affect your rates. For example, a driver with a car that has a high National Safety Rating will typically pay lower rates; as will the driver of a car that has airbags and an anti-theft device.
Type of Coverage
As with all insurance, there are varying types and amounts of coverage that you may have for your vehicle. A driver who carries only liability coverage will typically have a lower premium than a driver with the same car who carries liability, comprehensive and collision coverage. Every state has different minimum coverage requirements. Also, if you have leased or financed your vehicle, your lending institution may also require you to carry a minimum amount of coverage.
Driving History
One important document that your insurance company will review before determining your auto insurance rates is your DMV driving record. After you purchase a policy your insurance company will typically recheck your record every 6-12 months to determine if you have been in any accidents or have received any violations. If you have received speeding tickets or fines for traffic violations you will probably pay more for car insurance than someone with a clean driving record. Violations and accidents add points to your driver’s license. These points almost always translate directly into an increased premium. Each violation and accident is different, and the severity of the occurrence determines the number of points that get added to your license. Usually, these points will be removed from your license history after three years from the date of offense.
Your Insurance Score
Every insurance company calculates your insurance score which may vary from one company to the next. Your insurance score is typically calculated by taking into consideration your claims history, payment history and credit score. Usually, the lower your insurance score, the lower your insurance premium because insurance companies typically reward drivers for having good credit.
Discount Qualification
Auto insurance discounts provide additional savings for qualifying customers. Some of these may include discounts for vehicles that have anti theft devices, or driver’s who have completed an accredited Defensive Driver Course.
Your State of Residence
Finally, each state’s insurance commissioner and insurance rate bureau decide the rates that car insurance companies can charge in that state. Drivers in some states typically always pay more than drivers in other states. For example in 2006, Washington D.C., New Jersey and Louisiana residents were the top paying auto insurance customers in the country averaging around $1,130/year for their auto insurance. On the other end of the spectrum, North Dakota, Iowa and South Dakota drivers paid the lowest premiums in the country in 2006 averaging around $540/year.
Have other questions about auto insurance or how to get started? Want to speak with one of our licensed agents? Give us a call at 1-877-506-9466 and let us get started on your quote today!
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