It’s not a mystery how auto insurance providers determine rates. Insurance companies base premiums on several factors, including the risks associated with a policyholder’s behavior, occupation, and residence, as well as the vehicles being insured. All these factors come into play when insurers determine rates.
According to insurance experts, motorists may not be able to do much about their place of residence or the car crime statistics in their neighborhood. This means that when it comes to this particular aspect, insurers clearly have the upper hand. Even the cars that policyholders drive may have negative effects on their premiums. For instance, recent studies suggest that some car models are fast becoming the favorite of car thieves who strip away almost everything they can from the cars to sell in the black market.
Car owners can raise their deductibles to get lower premiums. In fact, motorists can increase their deductibles up to $1,000 and get 40 percent off from their insurance costs. However, policyholders need to understand that they must have the corresponding amount in cash in the event that their cars require repairs. Drivers who own older cars can also drop their comprehensive and collision coverage. Again, policyholders must have the necessary financial capability to pay for any damage that their cars may acquire.
However, there is one factor that motorists do have complete control over – their driving records. More and more insurers are basing rates on the driving behaviors and records of their policyholders. Insurance providers are now starting to place more importance on how cautious and responsible motorists are, instead of other factors.
To avail of better premiums through safer driving, motorists need to avoid getting traffic tickets or moving violations. Any citations on driving records can automatically mean higher rates for the next several years. Multiple violations can suggest that a policyholder represents more of a risk than insurers are willing to take. A poor driving record can mean that a motorist is more likely to get in an accident.
Even if car owners decide to find other insurance providers, their driving records would still stay the same, giving other insurers a glimpse into how safe and responsible a motorist is. Most policyholders who find themselves dealing with bad driving records can expect their insurance premiums to skyrocket and remain expensive for at least three years.
Motorists can take special driving reeducation courses often offered by insurance companies to take some points off their driving records. If they complete the program, they can also qualify for substantial discounts.