What determines the price of an auto insurance policy?

One of the most tedious and unfortunately recurring processes of car ownership has got to be determining an auto insurance policy each year. What many people don’t realize when they become first-time car owners, is that just because someone owns an identical car to you, it doesn’t mean that they are paying a similar fee for their insurance cover too!

While CarIndigo can take care of your car buying needs, insurance is one aspect which can be very confusing, and no matter how much you read and research, you’ll eventually hit a wall after a while. To help you out, let’s break down the factors on which your insurance fee is dependent.

When you are looking for auto insurance, there are various cover types you can opt from that heavily influence what you would pay your insurer. Some of the general cover types are as follows:

 

• Liability Coverage: Liability Coverage is a legal requirement in most US states for youtube able to legally drive your car. It covers the damages caused to the other party for which you are legally responsible due to a mishap that has occurred from your end.

 

• Collision Insurance: When opting for such a policy, your own vehicle is also covered for reimbursement of damages, even if you are the cause of the accident that has occurred.

 

• Comprehensive Insurance: Comprehensive coverage is one of the priciest coverages as it not only covers both parties in an event of a crash but, one can also make an insurance claim for the damages to their own vehicle even if such damage is caused by weather events, an act of vandalism or is the result of animal activity. The coverages can also cover specific circumstances such as a hydro-locked engine, blown-up transmissions, and failed vehicle immobilizers.

 

• Uninsured/Underinsured Motorist Insurance: This coverage comes in handy in cases of hit and run or when the party that has been the cause of an accident has inferior insurance coverage that unfortunately doesn’t completely bear the expenses of the damage to your vehicle.

 

• Medical Payment Coverage: If an accident caused by you results in medical injuries to the other party involved, such coverage can help save you some excruciatingly high medical bills.

Although there are various other types of specific insurance covers, the ones mentioned atop cover a healthy portion of them. When choosing a cover type one should compare the prices of each type of coverage and make an informed decision pertaining to their type of vehicle and how much liability they want to offset. Websites can prove to be a great tool for such an analysis as it provides you with accurate pricing info for the cars that you might want to purchase thus giving you a fair idea of your insurance rates before you pull the trigger to buy any vehicle!

Apart from the type of coverage you opt for, there are various other dynamic reasons that influence your insurance rates as even two individuals with an identical vehicle and insurance coverage can have drastically different insurance premiums.

Some of these reasons have been mentioned below:

• Driving Record: It should not come as a surprise but your driving record plays a crucial role in determining your insurance premium. It is arguably one of the top factors and the cleaner your record the lower your insurance rates. If you have a history of reckless driving, accidents, and/or traffic violations, many insurance companies can state up deny you insurance while the ones that do could charge exorbitant amounts.

 

• Frequency of use: Although this is a bummer for most car enthusiasts, unfortunately, the more you drive your vehicle, the higher would be your insurance rates as the companies believe that a person that drives around more, has a higher risk of getting into an accident as well. So people with longer commutes or the ones that love road tripping, be ready to pay up!

 

• Location of use: When insurance companies generate quotations for their prospective clients, one of the leading factors that drive up insurance premiums is certainly the location of the vehicle. For example, if you live in a neighborhood that has constant cases of vandalism and theft or has a statistically high probability of damage to your vehicle, your insurance premium could certainly rise significantly. Insurance Companies also take into consideration where your vehicle would spend most of their time when not in use, therefore the permanent parking location of your vehicle can also affect your rates. If you don’t have secured/covered parking for your vehicle, there are chances that an insurance company would definitely charge you more to cover your vehicle.

 

• Safety devices: One of the easiest ways to help bring down your insurance rates is to appear to be proactive in front of your insurance company. You see, if it is brought to the knowledge of the insurance company that you have safety measures installed on your pride and joy, they do cut you slack on your insurance premiums. Insurance companies are certainly happy when potential clients already have safety devices installed such as GPS trackers, dashcams, gear lever locks, and disc locks to name a few.

 

• Age: It is generally presumed by insurance companies that younger drivers are more prone to getting into accidents as they are much less experienced behind the wheel and sometimes may let thrill get the better of their judgment. It can therefore be noted that teenagers and people under the age of 25 do have to pay higher insurance rates even if they have a clean driving record.

 

• Type of vehicle: This is pretty much a given as the pricier your vehicle, the more it is going to cost to insure it is plain and simple. Although there are other aspects as well such as the body type of a vehicle, the onboard safety kit, overall power output, likelihood of theft to name a few which weigh in when determining insurance rates, the price still remains as one of the key factors. In a peculiar case where you want to insure a two-door sports car that might have an MSRP similar to an average family SUV, more often than not insuring the sports car would cost you noticeably more as the insurance companies do consider family SUVs safer than sports car due to the inherent nature of how they are intended to be driven.

 

• Credit Score: Lastly, similar to the concept of a credit score, there is also a credit-based insurance score that statistically predicts how likely you are to file for a claim which can be used to manipulate your insurance rates.

 

In conclusion then folks, insurance estimates are never set in stone, and haggling can always get you a better deal, the above-mentioned info should prove to be useful and help you negotiate a better deal for yourself. Trust us, sometimes just your knowledge on the subject can help you knock off some dollars!