Most motorists hear things about what they need to do to get cheap auto insurance. However, what you hear from your friends or colleagues may not be true. Also, there are a few myths you may get to believe after hearing several times. It is best to find out what is correct and what is hearsay. Accurate knowledge will help you save money and arrange the best coverage. Here are some of the things you should know about auto insurance premium calculations.
Vehicle Insurance Costs Can Differ Substantially from One Company to Another
For example, many people think that car insurance rates are set by state insurance departments and therefore it would be the same regardless of whichever company you apply. This is a totally false belief that can cost you hundreds of dollars every year. Each company determines their prices based on unique formula they use. The premiums can be as much as couple of thousand dollars different in some cases. So, never accept the first premium offered to you. Shop around carefully until you are fully satisfied with the costs and coverage.
What Are the Factors Affecting Your Rates?
Age, gender, cars insured, claims history, driving records, credit score, annual mileage, marital status, home address and profession are some of the key factors affecting your quotes. These are not in the order of importance or carry the same weight. Some factors like age can be real important if you are below 25 years of age. However, it may not make a huge difference between the age of 30 and 40.
Every company weigh each factor differently. For example, company A may pay extra emphasis on credit score while company B would care more about your claims history. Just because you got a high premium from one of them does not mean that you should pay high rates. There are many other companies to check with before making your mind. Remember, you may save yourself good several hundred dollars in the process.
Who Gets the Cheapest Car Insurance Rates?
The best way of looking at it is to make a comparison as below
- Ladies generally get lower rates than the gentlemen.
- Drivers get considerable rate reductions when they reach the age of 25. So, young drivers would need to gain some experience before they can claim the highest discounts.
- Drivers with safe cars pay a lot less than the drivers with sports cars and older model automobiles. If you are planning to buy a Porsche for your teenage child check if you can get insurance first.
- Drivers with at least three years of no claims and no traffic tickets can claim considerable discounts with most insurers. One claim can wipe away these savings. Second and third accidents in one year can make it difficult to find insurance coverage. It would not certainly be cheap.
- Motorists who live in city centers pay a lot more than country folks. This could be several times more in some areas. Adding the cost of parking and unavailability of it, owning cars in the metropolitan centers can be real costly.
- Increasing your deductibles can reduce the premium. This is one option if you want to buy more coverage but cannot afford it.
- Having a good credit score can help you save on car insurance.
- Traffic moving violations are seen by auto insurers and affect your rates considerably. You may be refused coverage if you have a DUI by most companies.
You need to qualify for several discounts if you want to get cheap car insurance quotes. If you ignore these points you can end up paying high premiums for the choices you made in your driving life.