If you are out there trying to buy cheap auto insurance, you need to know what factors are commonly used in determining your insurance premiums. Knowing beforehand what applies to you can give you an edge towards finding the most suitable ones.
Premium rates are computed the way the insurance provider sees you. Remember that insurance is a game of risk, so the greater the risks, the higher the premium. In addition, the type and brand of your car, your driving records, age and other optional elements are taken into consideration as well.
Age Does Matter – Age is probably one of the most important factors to be considered during premium calculation. A driver who is below 25 years of age should not expect cheap premium rates. Inexperienced and young drivers are considered risky drivers. This means the probability of filing insurance claims and legal tussles are sky-high. Insurance companies do not favor these types of scenarios.
However, the skyrocketing fees for teen auto insurance are not entirely the fault of the insurance providers. This is only in response to the growing number of accidents involving teenage drivers. To compensate the steady growth of insurance claims and sustain company’s profit, insurers are hammering them with expensive insurance policies. Of course, there are always exceptions to the rules and we’re going to talk about it in our next batch of articles.
Driving Records – Driving records are another important piece of the puzzle. A severely smeared driving record is rarely eligible to receive a cheap insurance premium. If this were you, most insurance companies would assume that you would be in a similar situation in the future. Keep in mind that even a simple traffic violation will remain active in your records for years. This is why it’s important to maintain the cleanliness of your driving record, because it serves as your ticket towards getting an affordable policy.
The Model and Car Type – The type of car you drive also influences the final computation of your rates. Some cars such as sports and luxury cars are just too risky to own or drive. The reason is that when these cars participate in a car accident, the owner would need a substantial amount of cash for repairs. Additionally, sports car owners tend to drive faster, thus incurring significant damages to both life and property.
Again, insurers don’t like to see these things happen regularly because it’s a huge cut in their profits. If you want to save on your monthly or yearly billing, try driving a small family car instead of the expensive and luxurious units.
Policy Add-Ons – The factors don’t stop there, because there are still optional extras to be discussed. Although their values are rather small and insignificant, adding them on top of the other could amount to a few hundred dollars. Before signing the dotted line, make sure you compare the original cost before and after the add-ons. Sometimes, add-ons can defeat your purpose of finding cheap insurance premiums. For instance, you do not need to ensure the additional equipment you mounted because of your do-it-yourself car pimping. The sound system, vehicle rental, CD/DVD or auto glass add-ons can be scraped as well.
