Gathering auto insurance quotes and signing up for policies can be frustrating, especially if you’re doing so for the first time. To better understand how each quote is determined, read on for more information on what factors are involved in the process.
Demographic Factors
If you’re a 24 year old man, I’m sorry to say that you’re out of luck – young men in the 18-25 year old demographic tend to have the highest car insurance premiums out of all drivers. And in the insurance company’s eyes, this makes sense, as members of this demographic tend to be the statistically riskiest drivers. Age and gender are two of the biggest factors in determining what you’ll pay in insurance premiums. Men and women under age 25 can expect to pay higher car insurance premiums, and typically, men will pay more than women.
Driving Record
The car insurance company’s goal is to minimize its risk of having to pay out claims, so it awards lower premiums to drivers who have proven themselves to be safe. Of course, very few drivers have spotless records, so most insurance providers allow for some leeway in terms of infractions. However, if you’ve been declared at-fault in an accident, or if you have a long history of speeding tickets, you’re going to pay more for your car insurance. If you find yourself in this situation, do your best to stay ticket-free – if you make it 3-5 years without another issue, you may be able to have your premiums lowered.
Credit Score
It’s a sad, but true fact that your credit score does have an impact on how you car insurance premiums are determined. Car insurance companies look at your credit score as indicator of how responsible you are – to them, a bad credit score demonstrates that you’ve been negligent in your financial life and are likely to exhibit these same behaviors on the road. Many people argue that this isn’t fair, and it’s true that many people with low credit scores are perfectly safe drivers. Unfortunately, you need to have car insurance – regardless of your credit score. If your score is low, do your best to improve it, then request your insurer to re-evaluate your policy to see if you qualify for a lower rate.
Type of Car You Drive
Generally, if you drive an expensive sports car, you can expect to pay more in insurance premiums than someone driving a 10 year old minivan. This makes sense – if you total your car, the car insurance company will have to pay more to settle your claim if your car is worth more. Now, this doesn’t mean that you should go all out and purchase the sports car you’ve always dreamed of. However, it is a good idea to plan for these expenses before you purchase the car. It doesn’t do you any good to buy a car at the high end of your budget if you can’t afford the insurance premiums!
Annual Mileage
If your car spends most of the time in the garage, you’ll pay less in insurance premiums than someone with a lengthy commute. However, most car insurance quotes are based on standard yearly mileage estimates. If you don’t plan to do a lot of driving, call up an agent for a specialized quote – your premiums may be substantially less if you’re classified as a pleasure driver instead of a commuter.
