Automobile insurers look at the details closely linked with the possibility of a policyholder involving in an accident or submitting a claim while determining how much premium they charge. Several common factors like age, driving and credit history, particulars of the vehicle, other drivers and zip code explain why a driver has expensive car insurance. There may be some external reasons too and you may still have a way to do something about it.
You may be surprised with the causes but solutions can be much simpler than you think. Here are some of the common reasons for expensive auto insurance premiums and some suggestions to keep the costs under control;
- Age and gender
Teenagers are the most perilous for carriers because they have the most alarming number of accidents and fatalities of any other group of drivers. A 16 year old driver may have to pay 4 times more for car insurance than a 25 year old and teenage boys are considered even higher risk and pay higher rates than teenage girls. Also, rates start going up after age 65 as older drivers are known to get involved in accidents.
Teenage drivers can double the premiums when they are added to parents’ policies but it is still a lot cheaper than buying a separate policy for them. If you are a student with at least B grade, you should look for good student discounts. Taking further driving courses can qualify you for discounts too. Furthermore, don’t exacerbate the situation by buying one of the most expensive cars to insure, which could make your auto insurance premium very expensive.
- Accidents and claims
If you are looking to keep low rates, avoiding claims is a sure-fire way to do so. Claims often result in increased renewal quotes. An at fault accident claim can increase automobile insurance premiums as much as 42% on average. Even a minor accident claim can cause serious premium increases. You may want to consider whether making a claim when you have a minor, containable damage to the automobile or pay it out of pocket.
- Moving violation tickets
A single speeding ticket can increase your vehicle insurance premium up to 23% on average as speed is known to be one of the major contributing factors in accidents and claims. The number and seriousness of traffic convictions can make your auto insurance very expensive. If you ever get a ticket and are given a chance to take a course that can prevent it from going on your driving record, you should take it because tickets affect your premiums for at least three years.
- Lack of insurance history
If you are buying vehicle insurance for the first time, you have no proven record and therefore you get charged higher rates to compensate for the unknown history. Also, if you let your policy lapse, you lose your continuous coverage discount and start all over again. That is why it pays to be attentive not to face policy cancellations and lapses due to non-payment. And you may want to keep your policy running even if you sold your car if you are buying another one shortly anyway. Reducing your coverage and keeping the policy even if you won’t drive for a while may be another option.
- Vehicle you drive
Automobiles are rated separately, just like the drivers and affect insurance premiums a lot. If you have sporty futures, a big engine and fast car, you are likely to pay higher rates for auto insurance in comparison to a modest car that is slow in accelerating and doesn’t cost a lot to repair or replace. If you have taken a normal compact or sedan and put in racing parts, custom equipment and fabricated parts, it is likely that it is now more expensive to insure. These extra parts are much more expensive than original manufacturer parts and cause a spike in chances of accidents and repair costs. You should always check with your agent before making any modifications.
- Credit score
Nearly all states allow use of credit score as a rating factor, except California, Hawaii, Massachusetts and Michigan. Companies consider drivers with low or no credit scores as high risk of making claims. When money is tight, people tend to claim for everything as opposed to paying small damages out of pocket. So, if you have a low credit score or it has been falling lately, you are likely to pay high vehicle insurance rates. The solution is to stay on top of your payments, don’t apply for too many loans and control the balance on your credit cards. Also, you might want to check your credit score for mistakes that cost you points.
- Expensive zip codes and states
Your zip code is rated too. If you live in a large city with high population density, congested traffic, increased crime levels and vandalism, you are likely to face expensive car insurance rates. Also, your rates significantly change depending on which state you live due to insurance legislations, litigations, fraud and weather and economical conditions. You just have to shop around harder to find the best deals as rates change considerably between one company to the other.
Simply the more you buy the higher your auto insurance gets. For example, a liability only policy costs 69% less than full coverage on average. That is why some teenage drivers can only afford liability only coverage as their premiums are much higher. In that case, you may need to choose a cheap car to buy because a liability only policy doesn’t cover your automobile.
- Your auto insurer
Your current provider may just be more expensive than the competitors and you may be paying expensive vehicle insurance rates for not shopping around. Many people may think that only some unknown and riskier companies offer cheaper quotes. This is often not true as you can save as much as 50% by switching between companies within the top 10 in the country in terms of size. So, if you think your car insurance is too high even if you have good records, shop around to see if it is because you are with an expensive carrier.
Most companies offer more than 20 car insurance discounts. Even if you cannot qualify for a good driver discount due to recent tickets or accidents, you can still get many discounts that can reduce your premium as much as 20%. For example, you can get around 9% discount for paying your premium in full and another 10% if you commit to buying your policy at least 10 – 14 days in advance of your renewal date.
You need to have a close look at the factors that affect your premiums. Your rates for automobile insurance may be really high or they may not actually be as bad as you think. The only way to find out is to carry out comparison shopping. Then you know for sure and hopefully some of the tips above help.