Factors Contributing to Elevated Car Insurance Costs
If your car insurance rates seem high, there could be reasons for it. In general, insurance companies charge higher rates for higher liabilities. In other words, the more likely it is that they’ll have to pay a claim, the more they’ll charge you every month. But there are certain factors that could make your car insurance more expensive.
Keep reading to find out the top reasons.
Young drivers pose a high risk to insurance companies. This usually means high rates. Boys tend to pay much higher rates than girls. The Insurance Institute for Highway Safety claims that teens ages 16-19 are at the highest risk of causing a fatal car accident than older drivers.
Typically, you’ll pay what feels like inflated car insurance rates until you are 25-years old. Then, insurance rates tend to fall because your risk of making impulsive decisions or taking chances diminishes. Insurance companies feel you are a lower risk as you age.
Your Geographic Location
The area in which you reside significantly influences your insurance premiums. If you live in a peaceful, rural neighborhood with low crime rates, you can expect to enjoy more affordable insurance rates. However, if you reside in a high-crime urban area, your insurance costs are likely to be considerably higher. These rate variations stem from the level of risk associated with potential claims. High-crime areas pose a greater risk of theft and vandalism, prompting insurance companies to charge higher premiums to offset that risk and maintain their financial stability.
Lack of Insurance Bundling
Failing to bundle your insurance policies can also impact the cost of your coverage. Think of it as a loyalty discount – the more policies you consolidate with a single insurance provider, the less you’ll pay. Insurance companies aim to foster customer loyalty, encouraging you to maintain multiple policies with them over the long term.
If your policies are currently spread across different agents, consider exploring opportunities for consolidation. Typically, the most significant discount is achieved when you combine your home and auto insurance under the same agent. However, it’s advisable to consult with your insurance agent to explore any other potential discounts available to you.
Your Driving Record
Being a safe driver pays off in more ways than one. Insurance providers scrutinize your driving history, and if it’s marred by a series of tickets or accidents, you can expect to see your insurance premiums rise. Risk-taking behavior behind the wheel increases the likelihood of insurance claims, which in turn necessitates higher premiums.
Your driving history is a reflection of your conduct on the road, and any tickets you accumulate become a permanent part of that record. While a single ticket may not definitively lead to higher premiums, the severity and nature of the violation matter. Parking infractions are unlikely to have a significant impact, but serious offenses such as drag racing or texting while driving can indeed trigger rate hikes because they elevate the risk of accidents.
Your Insurance Track Record
Insurance companies closely examine your prior insurance claims to gauge your likelihood of filing future claims. The type of claim does make a difference, but even if you’ve filed a claim for an accident that wasn’t your fault, it could still result in higher premiums, primarily due to the fact that you were involved in an accident.
The Vehicle You Own Each make and model of a vehicle comes with its own set of insurance rates. If you opt for a high-performance, flashy red sports car, be prepared for substantially higher premiums compared to a more conventional choice like a Honda Accord. Before purchasing a new vehicle, it’s advisable to consult with your insurance agent, as they can provide you with insights based on factors such as the car’s proclivity for speeding, its safety features, and its susceptibility to theft or vandalism.
Your Driving Habits
Your insurance provider needs to understand your regular driving patterns. How far is your daily commute to work, and how many miles do you typically cover in a year? The more miles you log, the greater the likelihood of being involved in an accident, and this affects your insurance risk profile.
Who’s Behind the Wheel?
The individuals who operate your vehicle also influence your insurance costs. If a 16-year-old family member is listed as a driver, or if you have a spouse with a poor driving history included on your insurance, expect to see your rates increase.
While auto insurance rates are generally on the upswing, you can take steps to mitigate the impact. Identifying and addressing the factors that increase insurance costs is essential. Present yourself as a low-risk driver who operates a safe vehicle and adheres to the rules of the road to secure the most favorable rates.