Taillight and spoiler on new white car image by steven Husk from Fotolia.com The kind of car you drive is a factor used to determine premiums. Many factors contribute to your car insurance costs, and sometimes insurance companies determine risk factors differently. For example, some providers use your credit report rating to determine your risk factor and policy cost. Beyond the most common factors that determine your premium, such as accident and driving history or age and driving experience, companies also offer a range of discounts or forgive price increases. Rates can differ, so be sure to shop.
Driving History and Experience
Your driving history has a great impact on your car insurance premium. At-fault accident history, along with ticket history, increases your premium. Experience, or the amount of time you’ve been driving, is also a pricing factor. Newly licensed drivers pay more for insurance coverage. An inexperienced driver with tickets, points on his license or an accident history is considered a high risk for insurance providers. A DUI (driving under the influence) charge can cause sky-rocketed premium costs so consider using a broker to shop for your policy rather than trying to do it yourself. Some insurance providers will penalize you for your driving history longer than other companies, so ask potential insurance companies how long you will be penalized for a ticket, accident or points on your license.
Personal Information
Some states and companies use credit ratings to determine your risk factor and premium cost. Many companies, such as Allstate, State Farm or Liberty Mutual, discount a policy for the following reasons: a bachelor’s degree, home ownership and marriage. If you’re shopping around or one of your life situations has changed, use this to your advantage. Let your potential or current insurance provider know about this information and ask about a discount.
Vehicle and Commute
The kind of vehicle you drive and how far you drive it every week is used to determine your risk factor. A modern, safer vehicle with common safety features such as front and side impact airbags, active or passive alarm, a vehicle tracking device such as Onstar (in case of theft) and traction or stability control will reduce your vehicle risk factor and premium cost. Where you live is a consideration. If you live in a high-crime area, expect your policy costs to increase. Vehicle uses, such as personal, business or pleasure use, in combination with miles driven per year, are also premium price factors. Expect a higher premium if you have a long commute or use your car for business rather than personal use. If you move while your policy is in force, your agent will change your premium price accordingly.
Coverage and Multi-Policy Discounts
Liability coverage is required in all states. Liability insurance is the cheapest policy coverage, while full coverage insurance is the most expensive. If you have a loan on your vehicle you’re required to purchase full-coverage insurance to protect your lender’s financial interest in the event of a loss. Even if you pay cash for a vehicle, you may want full coverage, especially if you couldn’t afford to replace your car if you were to lose it. Multi-policy discounts are offered by a large number of insurance providers. Consider using one company for all your insurance needs and ask about available discounts.
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