When you operate a motor vehicle on public roads, it’s imperative that you have adequate auto insurance. Your car insurance policy is an important part of owning a vehicle. It protects you financially in the event of an accident, theft, or other damage to your car.
However, car insurance can be expensive. In fact, the national average cost of car insurance is $1,601 per year, according to Forbes. Several factors determine insurance premiums. Understanding all the factors that can influence your premium is the key to finding the best deal for your insurance policy. From your age to where you live, your insurance premium could be drastically higher or lower depending on the details. Keep reading to find out what factors impact your insurance premium.
Type of Coverage
The type of coverage you require will have a large impact on how much you pay for insurance premiums. In general, most states require that all drivers carry a minimum amount of liability insurance. Liability coverage is the most basic insurance policy and will provide coverage for other drivers and their vehicles if you are at fault for an accident. However, liability coverage will not cover you or your vehicle. As a result, many people opt for additional collision and comprehensive coverage. Having liability, collision, and comprehensive insurance is known as having full coverage.
Collision coverage will pay for your vehicle in the event of an accident, no matter who is at fault. Additionally, comprehensive coverage will pay for damage caused by events such as natural disasters, fire, theft, or vandalism. Your premiums will be impacted by the types of coverage, and coverage amounts that you choose. In general, opting for full coverage will offer you maximum protection but will come with higher premiums.
Driving Record
Your driving record is one of the most important factors that insurance companies consider when calculating your insurance premium. This record is a comprehensive assessment of your history of traffic violations, accidents, and other driving-related incidents. Insurance companies use this information to assess the risk of providing coverage and set your premium rates accordingly.
Generally, drivers who have a history of traffic infractions, such as speeding tickets or reckless driving, will be seen as higher risk and charged a higher premium. Similarly, those who have been involved in more serious accidents, such as hit-and-run or DUI, will also be charged higher rates. Even minor accidents, such as fender benders, can have an effect on your insurance premium. The more accidents a person has been involved in, the higher their premium will be.
Age and Experience
Age and experience are two key factors that can affect your insurance premium. As you get older, you become more experienced, and insurance companies consider this when determining rates. Younger people are considered to be the highest-risk drivers and thus pay higher premiums. This is because they may be more likely to participate in dangerous activities or are more likely to be involved in accidents. From the ages of 16-19 is when someone will experience higher insurance premiums.
Type of Vehicle
The type of vehicle you drive is a major factor in determining your insurance premium. Generally, the more expensive the vehicle, the higher the insurance premium. This is because more expensive vehicles will have higher replacement costs. Additionally, the repair costs for more expensive vehicles can be much higher. When selecting your vehicle, you’ll want to factor in the cost of insurance compared to the value of the car.
Overall, it is important to understand the factors that can affect your insurance premium, such as your age, driving record, type of vehicle, and required coverage, as these can all have a major impact on the cost of your policy. By taking the time to understand how these factors will influence your premium, you can be better prepared to make informed decisions when it comes to selecting the right coverage for your needs.
