Like most costs, auto insurance rates usually increase over time, and some special factors raise premiums even higher than the overall inflation rate. Today’s cars are more expensive to repair; medical bill costs are also rising. These costs are passed on to you in the form of higher contributions. Why is auto insurance so expensive?
Here are the main factors that insurance companies take into account, ordered by the impact of these variables on your premium.
Where do you live
Residence can have a surprisingly significant impact on insurance premiums. Different areas have different rates of vehicle theft, vandalism, hail, traffic jams and other factors that tend to generate more insurance claims. For example, if you live in a large city, rates are likely to be higher than in a quiet rural area, because cities are more prone to traffic accidents than small towns. If you commute, you can also consider the level of risk in the area you drive through each day. For example, if you live in a small city, but commute to a large city, the rates will probably be slightly higher than if you both lived and worked in a small town.
You are under 25 years old
There is no escape; young drivers pay more for insurance – especially men.
Why are the average car insurance rates higher for younger drivers? Insurance companies see them as a higher risk. According to the Insurance Institute for Highway Safety (IIHS), drivers aged 16–19 are three times more likely to die than drivers older than 20 years.
You are a man
Men, especially young men, pay more for car insurance. Up to the age of 21, male drivers will pay about 20 percent more, but the picture is much more diverse for drivers older than 30 years.
As with age, this is generally related to how risky insurance companies consider men to be drivers.
According to IIHS, men between 20 and 29 are more than twice as likely to be fatal.
Your driving history
Insurance companies don’t like drivers with tickets. Good drivers are rewarded by paying less for car insurance because they are less likely to make a claim.
While a parking ticket should not increase your premiums (unless you haven’t paid the fine on time), movable misconduct is another story.
Your insurance company is trying to determine how safe you are as a driver. Tickets for offenses do not help your case – especially if you have more than one. You may be considered a “high risk driver”. You usually pay higher car insurance premiums because people with bad driving evidence report more claims.
Ways to lower the insurance rate
There are steps you can take to lower your car insurance rate. Consider some of the following ideas when trying to lower your monthly bill:
- Shop
- Check rebates
- Pay in advance
- Reduce range
- Buy a new car
When you buy, you can provide the best possible rate. It’s so easy these days. Just enter your information on the insurer’s website and wait for the quote to come back. It’s also a good time to look for discounts. Car insurers want your business and often offer discounts or incentives to use their services. You can talk to your agent about everyone you qualify for. Don’t hesitate to ask for discounts when shopping.
