By Mike Coppleton, Boston MA
The rising cost of healthcare and increased costs associated with auto repairs has both worked in concert to cause auto insurance premiums to rise steadily over the past two years. This increase will likely continue so it is important to know what factors are used in determining your auto insurance premium. An educated auto insurance consumer will be in the best position to take control and make sure you are getting the best possible value. The following factors are things you should take into account to determine if there are any important changes you should make with respect to your own driving habits and your driving situation.
While relocating to save money on auto insurance may not be a viable option, it is something to consider when faced with a move for other reasons. Insurers use zip codes to determine auto insurance rates in many states. Insurers utilize accident and claim data to determine which zip codes produce the largest number of losses. Once this information has been gathered, they will then adjust premiums in an attempt to make those zip codes profitable.
The mileage you drive every year is another factor that determines the size of your auto insurance premiums. If you can reduce the number of miles you drive, you can save on your auto insurance. This factor is used primarily because as more time is spent on the road, chances are increased of a potential accident.
Another factor that auto insurance companies consider is the type of vehicle you drive. More expensive cars are more expensive to repair, and they are often targets for theft. Fast cars tend to get into more accidents, and large vehicles like SUV’s do more damage when involved in an accident. Auto insurance companies when determining how much premium to charge take all of these factors into consideration. If you want to save the most on your auto insurance, consider economy vehicles that have a good safety rating. Vehicle safety devices will save money on insurance as well. Any device that makes the car safer to drive or harder to steal will result in lower premiums.
Your choice of auto insurance company will also play an important role in how much you pay for auto insurance premium. Every insurer evaluates risks differently, so it pays to obtain several competitive quotes. Be sure that you are comparing the same types of policies however. Quotes will often obtain very different coverage options that could give a skewed comparison of rates as one auto insurance company may be offering more coverage for less money.
Auto insurance companies will also consider you and everything that makes a person like you. The demographics of customers are an important factor to the amount of premium charged. Age, marital status, education level and occupation can give insurers information about the number of claims you may have throughout your life. When insurers compare your demographics to other people of similar age, marital status, etc., they can develop a picture of the type of risk you pose in terms of financial losses. This helps them to determine how much premium to charge.
In recent years, credit history has become an important factor in calculating auto insurance premium as well. You can do well to improve your credit scores, as those with higher credit scores will save money on their auto insurance. The reason for this is that insurers have recognized that people who have good credit scores are generally more mature and careful, causing them to avoid accidents more often.
Finally, consider the coverage you are choosing, as that will have a significant affect on your premiums. High coverage limits and abundant coverage options all add to your premiums. Also, consider the size of your deductible as a smaller deductible means lower premiums as well.
