Car Insurance Companies Figure Out Premiums: Motor and Policy Rates Quote Plans Claims

Car Insurance Companies Figure Out Premiums

Doesn’t your car insurance feel sort of-random every once in a while, like someone just drew a number out of a hat and decided that you were today’s lucky winner? Fortunately for you, it’s not as random as you think.

The Crazy Way the car Insurance Companies Figure Out Your Premiums

Have you ever sat there, stared at your car insurance policy and wondered

The make and model of your car has a lot to do with how much you pay in insurance each year.

what black hole they pulled that number out of? You can admit it. Doesn’t your car insurance feel sort of-random every once in a while, like someone just drew a number out of a hat and decided that you were today’s lucky winner? Fortunately for you, with the exception of the fact that they get millions of players every year the car insurance lottery actually has nothing in common with the Power Ball. It’s not as random as you think.

Discovering how your car insurance provider figures out the amount of money you owe them each month plays a vital role in helping you make the hard decisions when it comes to deciding what kind of car you want to buy, how much coverage you need and, more importantly, how you’re going to take advantage of both to convince them you really deserve cheaper car insurance than they offered in the first place. Hey, buying car insurance isn’t all that different from going shopping at the flea market. The first number you’re given should be considered nothing more than a jumping off point for further negotiations!

You’d be astonished what actually impacts the size of the check you cut to your insurer every month. Most criteria fall into four main categories:

1) Who You Are

a) Age. Younger drivers are always considered more of a risk.

b) Gender. It’s not fair, but statistically more men are involved in accidents each year than women are. That means that women are usually going to have access to cheaper car insurance than men do.

c) Marital Status. Married men and women of all ages are considered to be more stable and less prone to risky behavior than singles. Is it true? Not always. That doesn’t mean you shouldn’t enjoy the benefits while they last.

d) Zip Code. Driving in New York City. Driving in Middle-of-Nowhere, Oklahoma. When do you think you’re more likely to get in an accident? High traffic areas are practically bumper car parks.

e) Number of Years Behind the Wheel. The longer you have your driver’s license the better a driver you’ll be, and as a result you’ll be better equipped to handle whatever craziness ensues when you hit the highway.

f) Credit History. No, you can never get away from that three digit number. Your credit score affects your ability to obtain credit, your ability to get a job and now, your ability to find cheap car insurance.

g) Home Ownership. Much like marriage, homeowners are considered to be more stable than their foot loose and fancy free renting cousins.

h) Occupation. Did you know that each year there are more musicians and artists involved in accidents than teachers or engineers? Believe it or not, your occupation can play a major role in influencing your monthly payments.

2) Your Past

a) Accidents. Sometimes things happen that we have no control. Diva deer play chicken with oncoming cars to try and land a role in the next Geico commercial. Snow banks have the audacity to overflow the medians and turn the roads into a deadly landmine. Regardless, if you have one accident it’s likely that you’ll have another, and your car insurance provider is going to take that into consideration when determining the cost of your premiums.

b) Traffic Tickets. Driving fast and ignoring the rules of the road equals accidents, chaos and lots and lots of dollars in property damage. Insurance providers hate that.

c) “B” Average or Higher in School. Good students are disciplined-and chances are, they paid attention in Driver’s Ed! Keeping themselves on the honor roll can do wonders for the insurance rates of a teen driver.

d) Driving School. Driver’s Ed. Defensive Driving Courses. Driving School. Whatever they want to call it, taking a formal driver’s education course adds points onto your license and helps you find cheaper car insurance.

e) Policy Lapses. We live in a rough economy. There’s no doubt about that. But letting your car insurance policy lapse is both risky and irresponsible in the eyes of your insurers.

f) Filed Bankruptcy. Remember that credit score we talked about earlier? Poor credit hurts your chances of finding cheap car insurance.

3) Your car

a) Year, Make and Model. Newer types of cars are more expensive to replace than old ones if they have to be totaled, and certain makes and models cost more than others. The amount of money they’ll have to pay out in a worst-case scenario is going to directly affect the cost of your insurance.

b) Safety Features. Even though it seems like your car would be more expensive to insure if it was filled with safety gadgets, the truth is that insurance companies like safe, responsible drivers who protect their passengers from harm and your car from theft.

c) Annual Mileage. The more time you spend on the road, the more risk there is that you’ll be involved in an accident. Lower mileage equals cheaper car insurance.

d) Hybrids. Most insurance providers will cut you a discount for a hybrid vehicle in an attempt to encourage ecological awareness.

4) How Much Coverage You Purchase

a) Type of Coverage. The more coverage you have for your vehicle, the more it’s going to cost you to insure it each month. Protecting yourself from liability claims like the hospital bills of the driver you t-boned when you slid through the intersection is a need, but most of the time insuring your car against Mother Nature and your own mistakes is both optional and more expensive. And then there’s the matter of maximum limits. To make a long story short, more coverage is going to go hand in hand with higher rates, no matter where you buy your insurance.

b) Perks. Do you really need rental reimbursement, roadside assistance or any of the other hundred little perks car insurance providers are offering these days? Perks are nice, but they’re going to cost you extra each month. Cutting them out of the equation will lower your premiums in the blink of an eye.

c) Deductibles. Higher deductibles means your insurance company is paying less, which in turn reflects on your up-front costs. Raising your deductibles will lower your insurance premiums every time, but remember-you’re still going to have to pay the deductible if you have an accident, so make sure it’s safely in your price range.

All of these factors tie in to affect the cost of your insurance, and there may be more that are unique to your insurer. Make sure you grill your insurance agent thoroughly on the possibility of discounts and other cost-saving techniques before signing on the dotted line.

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Car Insurance Companies Figure Out Premiums

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