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The cost of an average auto insurance policy is derived from a variety of factors. Many of these variables are common knowledge and make sense for the most part, but it’s always a good idea to refresh yourself on what insurance companies are looking for when determining how much your coverage will cost. .
Driving Record – Your auto insurance policy price is determined by 6 key areas. The first is your driving record. The important thing to remember is that the better your driving record, the lower the overall cost of insuring your automobile. This would include auto accidents, speeding tickets and believe it or not you went without insurance for several years. The good news is that you can directly control many of these factors. Focus on keeping a clean driving record and your rates in this area should not be outrageous.
Coverage Amount – Sometimes do some self-checking and call your insurance company to see how increasing and decreasing your deductible and coverage amount affects the cost of your insurance. Increasing the deductible reduces your monthly payment. Raising the deductible has the opposite effect. The same goes for actual coverage amounts.
Age – Case studies have proved that younger drivers are involved in more accidents than older drivers. This potential to be involved in a collision is a result of inexperience behind the wheel of an automobile. Generally most insurance companies charge more for individuals below the age of 25 years.
Vehicle Model and Driving Mileage – If you are interested in that fancy new sports car, you will want to check how much this will affect the cost of your auto insurance policy. Thanks in large part to theft, the cost of the vehicles, and the safety record, some cars command a higher premium than other vehicles. As if that wasn’t bad enough, the annual miles you put on your vehicle through driving can increase your auto policy. An average of 10,000 miles are used in a year. If you exceed that total, you can expect a rate increase based on your increased potential to be involved in an auto accident.
Your Residence – It is a pretty safe bet that you will pay more for your auto insurance policy if you live in a big city than in a nice farm out in the country. There are probably more thefts and accidents in the city, causing the higher cost to be absorbed by the insurance company and then passed on to the consumer when the insurance companies set the price of your auto insurance policy.
Hopefully this information can help you focus on some areas within your auto policy that you can review with your insurance agent in hopes of actually reducing, rather than increasing, them.
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