Wouldn’t it be nice if the cost of car insurance were as simple to understand as the price of bread at your local grocery store? Unfortunately, car insurance is much more personalized, with premiums that are adjusted according to perceived risk the policyholder presents. Many different variables are considered when calculating your car insurance rates. Continue reading to find out what they are and what you can do to get a good value without sacrificing the quality of your coverage.
Your personal risk profile is made up of data about your financial history, driving history, and claims history, as well as several other important factors. All of this information is compiled to create your individual risk assessment, which helps determine the price you will pay for coverage. Examples of personal risk factors include:
- How many miles you put on your car each year
- Where you live (i.e. rural vs. urban; high-risk neighborhood)
- The number of insurance claims in the previous 3-5 years
- Your history of traffic violations and car accidents
- The type of vehicle you drive
- The age of the drivers on your policy (young drivers cost more to insure)
- Personal responsibilities toward creditors and other
It is important to recognize that insurance companies may use some or all of these factors in determining your individual risk. Likewise, each company will have a different formula for assessing risk, meaning that certain variables may be weighed more heavily than others. That is why quotes for the same coverage and the same person can vary so considerably from insurer to insurer.
Another factor in the cost of car insurance is the coverage itself. It stands to reason that having higher limits and broader coverage costs more than a bare-bones policy, but cutting down coverage is no way to save on car insurance premiums. In fact, lowering your liability limits or eliminating collision and comprehensive altogether could result in a damaging blow to your finances if you are ever sued or find yourself in a car accident. A better option is to raise your deductible. You will pay a little more out of pocket if you need to file a claim, but you will enjoy lower premiums and still benefit from the same great coverage.
Minimizing the Cost of Car Insurance
It can be difficult to navigate the car insurance market, and no one should have to do it alone. Working with an independent agency such as Tagge Insurance can give you instant access to quotes from a wide range of insurers. We can help match you with a carrier that is more favorable toward any negative risk factors that could be working against you. We will also look out for important discounts that could result in additional savings, such as:
- Safe driver discounts
- Claims-free discounts
- Good student discounts
- Home and auto-bundling discounts
- Multiple vehicle discounts
- And more
Other things to consider are driving with a monitoring device. Companies offer a very personal approach to your driving habits with devices you plug into your car that can measure how you drive, including speed, trips, acceleration, and braking to name a few.
To find out what factors could be affecting your premiums and to request your free quotes, contact our office today.