Taking out an insurance policy for your vehicle is of paramount necessity. It’s like your armor and shield when there’s battle down the road or, say, crashes and accidents. Without auto insurance, you’ll be paying an extravagant amount for medical bills, property damage, lost wages, and other compensations required. Worse, you’ll face legal liabilities.
With the help of car insurance, you won’t need to pay a lot for these financial liabilities as your insurance policy will cover them for you. However, keep in mind that having car insurance doesn’t mean you won’t have to pay for anything after an accident, but you’ll pay less.
How Do I Get Car Insurance?
You have two options in finding an insurance policy: acquire one directly from an insurance company or look for an independent insurance agent. If you have existing homeowners or renter’s insurance, it may be cheaper to get your car insurance from the same company.
Then, you’ll have to narrow down your coverage as this will be a significant factor in pricing your insurance rates, which will be elaborated on later.
Factors That Influence Auto Insurance Premiums
Shopping around various insurance companies and asking for quotes help you score the best deals. Insurance companies name their insurance policy in different ways. While not all companies have the same pricing parameters, it’s crucial to take note of these factors that affect insurance premiums:
A car insurance policy draws the line between good and bad drivers. If you’ve committed such traffic violations before, this puts you at more risk of getting into a crash. Therefore, expect that insurance companies will give a higher quote for this.
Take USD$1,000 as your insurance premiums baseline. If you have the following violations in your driving history, your estimated premiums will become:
Failure to observe traffic signs: USD$1,280
Driving under the influence (DUI): USD$1,657
Reckless driving: USD$1,770
Additionally, you can opt for getting SR22 insurance after committing a violation like DUI and reckless driving, as it’ll serve as your proof of car insurance, allowing you to keep your driving privileges. If you want to know more about SR22 insurance, take a look at this website.
Generally, accidents, theft, and vandalism occur more in urban areas than in small, rural towns. Therefore, if you’re located in an urbanized state like California and New Jersey, insurance premiums will be higher than in smaller states such as Maine and Vermont.
Also, the location where you park your car is taken into account. Cars parked on the neighborhood street have more risks of theft than vehicles parked in a designated garage. Parking your vehicle outside also means it’s exposed to weather elements like rain, snow, and heat.
Car Make and Model
It’s always a requirement to indicate your car manufacturer and model during an insurance policy application. Modern, updated cars are equipped with advanced tech features which can lessen their crash risks. On the other hand, some companies may insure newer vehicles with higher costs because their parts cost more.
Furthermore, many vehicle owners consider getting a used car to reduce their monthly insurance payments. However, it’s not always a guarantee, so it’s important to clarify with your insurance provider.
Used cars and old models have a relatively lower market value than brand-new cars and fresh models. Generally, the higher its value, the higher the costs to insure the vehicle. Some older models may have little to no safety features installed that will increase their risks of theft and accidents.
Moreover, the secondhand car’s history will also influence the insurance premiums, particularly these factors:
Car’s condition upon professional inspection
Salvage and total loss history
Odometer reading or mileage
Driver’s Health Condition
As the owner and driver of the insured vehicle, how risky are you to insure? It turns out that your car isn’t the only one diagnosed and evaluated for its condition, but also your overall health condition.
Do you have any existing medical conditions? Health issues can affect your accident risks, especially if your health condition can potentially hinder proper driving, such as the following conditions:
Physical and visual impairments
During your health evaluation, your smoking habits and alcohol consumption are assessed. Although this may cost you higher premiums, you’ll never know when you’ll get into an accident because of these habits.
You may think that lying about your medical condition can lower your insurance premiums, but oftentimes, it’s more expensive to be cheap. Be honest to your insurance provider if you have a medical condition.
Insurers also look at a policyholder’s financial status—simply because a lot of money is involved. Assessing your financial condition answers the question, “How capable are you in paying for your insurance policy?”
For insurance companies to answer this as accurately as possible, they’ll evaluate your credit rating and history. Have you been a good payer lately? Do you frequently miss payment deadlines? Using a credit-based insurance score helps insurance providers grasp their customer’s financial responsibility and allows them to quote a fair and appropriate price for each policyholder.
Type of Coverage
Insurance coverage refers to the amount of liability covered by an insurance policy. Most states enforce minimum coverage requirements that all policyholders should possess. While these requirements vary in coverage and price, they usually involve:
Bodily injury liability
Property damage liability
Uninsured / underinsured motorist coverage
Personal injury protection
Essentially, the more protection you have, the higher your insurance costs will be. You can add more coverage from the list above, which will increase your financial protection in case of an accident, like compensation for income loss, disability costs, and the like. If you’re unsure which coverage to choose, check out this guide to car insurance.
Linking one’s age to insurance premiums may sound stereotypical, but there are several research studies and findings that provide a valuable correlation between one’s age and gender to accident risks.
In this study, young teenage drivers are 60% more likely to get into road accidents than older age groups. Also, the Victorian Transport Accident Commission indicated that one in four of their recorded car accident deaths were individuals aged 18 to 25. With these numbers, there may be some truth to the belief that “with age comes wisdom.”
You can’t compare apples to oranges; in the same way, you can’t compare a person’s risks to another to dictate car insurance premiums. Still, insurance companies and agencies need some indicators and parameters to determine your insurance rates, such as those discussed in this article. Before walking into an insurance firm, be aware of these so that you’ll have a rough estimate of what insurance price to negotiate.