What factors influence the price of an auto insurance policy?

The average annual cost of auto insurance is about $ 800, but there is a huge variation because many things affect the price of a policy. All the factors that affect the price of a policy help determine what is the possibility that you have an accident.

The most surprising thing is that many of the factors that analyze these possibilities are better to predict that you may have an accident than your driving record. However, not all insurance companies use all the prediction factors listed and some companies may use others that are not included. In general, the price of your auto insurance policy may vary depending on any of these factors without an order of particular importance:



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Your driving history or driver history.

The better your driving history, the lower the auto insurance premium for you. If you have committed traffic violations, have fines or had accidents with the vehicle, you are likely to pay more for your insurance premium than if your record is free of them. You may also have to pay more for your insurance premium if you are a novice driver, have just taken out your driver’s license and have not had car insurance for a certain period of years.

The use he gives to his car and the miles he drives annually.

The more miles traveled, there is a better chance of an accident. If you use your car to work or travel a long distance to go to your workplace, you will pay a little more than if you only use the car from time to time, what is known as pleasure use or “pleasure use” , in which case you will pay less for car insurance.

The place where he lives and where he keeps the car.

The place where you live and where you park the car can affect the cost of the auto insurance premium. Generally, due to higher probabilities of vandalism, theft and accidents, urban areas tend to be more expensive for auto insurance than smaller cities, towns and rural areas.

Other factors that vary from one area or state to another include: the cost of litigation in the area, costs of vehicle repair costs and medical service costs, presence of widespread fraud against car insurance and the weather characteristics of the place.

The driver’s age

In general, mature drivers have fewer accidents than less experienced drivers, especially teenagers. Therefore, insurers usually charge a higher premium to young people who drive or if there are people under 25 in their family who drive their vehicle.

If the driver is male or female.

As a group, statistics show that women have a lower frequency of being involved in an accident, or driving under the influence of alcohol (in English it is known as DUI – driving under the influence), and they have accidents that are less serious than men. that occur while men drive. Of course, this depends on the individual specifications and the driving history or driving history of each, which will have a greater impact than the generalities, on how much the car insurance will cost.

The type of insured car you drive.

Some cars are more expensive to insure than others, depending on many variables, such as the possibility of theft, the cost of replacing the car, the cost of repairs, and the characteristics and safety performance of the vehicle. Things like the size of the engine can influence how much you will pay for insurance even in the case of the same models or the same brand. Cars that have high quality safety devices may qualify for some specific premium discounts.

Insurers not only look at how safe the vehicle is for those who drive or ride in it, but also how much damage that car can inflict on another vehicle. If a car has a greater chance of inflicting greater harm on another or its occupants in an accident, it is possible that the insurer may decide to charge a higher civil liability insurance premium.

The insured’s credit.

For many insurers, the risk rating of an insured based on the driver’s credit history is one of the most valid tools in predicting the possibility of a person filing a claim for an accident with the car insurance company. The credit histories used in insurance are based on credit information that includes the person’s payment history, if he has delinquent accounts, if he has declared bankruptcy, how much he owes and since when he has a credit history. For example, a credit history that shows payments on time in credit card and mortgage payments accounts has a positive effect on the use of credit history for insurance, while arrears and delinquent accounts represent a negative impact on the use of credit cards. credit history for insurance purposes.

The type and amount of insurance coverage acquired by the driver.

In almost every state of the country, by law, a driver is required to have a minimum liability insurance coverage. Each state determines the coverage limits required in the state and is generally very low and the vast majority should consider buying more than the minimum coverage required. Moreover, the amount of coverage recommended is usually ten times more than the minimum required by state laws.

If you buy a new car, or a recent model (or are financing the vehicle), you are very likely to purchase elective collision coverage and coverage for damages other than crash or extensive (comprehensive), which repairs or replace the car for damages suffered due to weather, theft, physical damage to it, etc. Shock and extensive coverage are subject to a deductible, and this, the higher it is, the less you will pay for the premium for that portion of the insurance. While there is no legal requirement that requires you to purchase collision or extensive coverage, if you finance the vehicle, the finance company may require you by contract to acquire them.

 

Updated: November 30, 2019 — 2:47 pm

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