What factors affect car insurance rates?

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Here's what you need to know...
  • Many people renew their insurance every time without determining if it is the best rate for their situation
  • When purchasing auto insurance, there are several things that contribute to the premium that you must pay
  • If you feel like you should buy as little insurance as possible because you have no assets, think again


Many people are complacent when choosing car insurance. They renew their insurance every time without determining if it is the best rate for their situation.

Today, however, comparing auto insurance rates is simple if you use the right tools.

Before purchasing or renewing an auto insurance policy, use our FREE online price comparison tool to find the best insurance providers and rates in your area.

What are the factors that influence my premium?

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When purchasing auto insurance, there are several things that contribute to the premium that you must pay. The following are some of the most common factors:

  • Your car
  • Your driving history
  • Your driving habits, such as how far you commute and whether it is in a congested city or a rural area
  • Your age
  • Your marital status
  • Your credit score
  • Where you park your car at night (e.g., garage or unsafe street)
  • Where you live

Luxury Vehicles

If you are like many drivers, comfort and luxury are must-haves in a car. Maybe you justify it as a reward for grueling commutes five days a week. Whatever the reason, you are resigned to paying the price in order to make the most of your drive.

However, more expensive cars cost more to replace. Also, if the vehicle is rare or imported, it may cost more to hire a mechanic who has the expertise to make repairs to it.

As a result, a more costly vehicle means a more expensive insurance premium.

Injuries and Insurance

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When determining the limits of the bodily injury liability and property damage liability that you are about to purchase, it is important to consider the following factors:

  • Assets, including cash, investments, property, and priceless personal belongings; the third parties injured in an accident are likely to explore your finances to determine if you are worth suing for damages.
  • The values of the cars belonging to other people in your area, home, work, or parking garage; if those around you have expensive cars, buy more coverage. If you hit them, it will cost more to fix their vehicles.

Insurance exists for life-altering accidents. Secure your financial assets by making sure you have enough vehicle insurance.

The normal recommended amount of coverage is $100,000 per person and $300,000 per accident in bodily injury liability and another $100,000 in property damage liability.

If you still feel like you would be a target for a lawsuit, then buy more insurance. In this case, you should consider talking to a financial planner, such as an insurance agent.

If you do speak to an insurance agent, be careful. Any information that you offer, whether actual or theoretical, could affect your insurance rates.

If you feel like you should buy as little insurance as possible because you have no assets, think again. You can be sued, and your wages can be garnished. To prevent that from happening, it is important to consider buying more auto insurance than the legal minimum amount.

There are many people who drive without insurance or with only the minimum legal amount of insurance.

  • If they do not have auto insurance, they are uninsured motorists.
  • If they buy the minimum amount, they are underinsured motorists.

When you are involved in an accident with an uninsured or underinsured driver, they may not have the finances to pay for your bodily injuries or the damages to your car.

In this case, your insurance seizes whatever payout they can take from the other driver if they have any insurance. Then, your insurance company uses your uninsured motorist bodily injury and property damage coverages to fulfill your claims.

It is important to remember that you may only buy as much uninsured motorist coverage as you have purchased in bodily injury liability.

Giving up Collision and Comprehensive

At some point, if you keep your car long enough, it will be worth less than the insurance and deductibles. Many people eliminate collision and comprehensive coverage when their vehicles have a low actual cash value.

However, before canceling your collision and comprehensive coverage, you should consider your financial situation and make the choice that is right for you.

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Rentals and Roadside Assistance

The advantage to buying collision and comprehensive is that you are eligible for rental reimbursement through some carriers.

Rental reimbursement pays a daily stipend for the number of days that you specified when purchasing this coverage.

A basic coverage is $30 per day for 30 days or up to $900.

Roadside assistance is another type of coverage that people often buy through their insurer. It is less than $20 per year, which is less than the average independent roadside assistance club.

However, read the fine print first because using your insurance carrier’s roadside assistance may count as a claim, which can increase your rates.

Saving Money

If you are among the many people who do endure a long commute, you can still save money. Be a safer driver, stay alert, and keep your driving record clear of citations, such as moving violations and tickets.

Claim-free periods also help you improve the likelihood that your insurance rates will drop instead of increase.

If you have had an accident or tickets, then shopping around for a new insurer may be just what you need to save money. Some insurers forgive the first offense or accident.

Others declare a diminishing deductible over time. Others want a new customer and will offer you a low premium.

Tips for Comparing Quotes

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When you receive your next renewal notice, do not ignore it. It is a great opportunity to save money on your next insurance policy. It only takes a few minutes to find out how much you can save.

Also, online quotes are free. You can play around with various limits to find a plan that works for your protection and your budget.

Be honest about all of your information. If the information you provided is inaccurate, the insurer will find out when you try to make a claim. In this situation, your insurer may cancel your insurance.

A cancellation of insurance sends out signals to all the other insurance carriers that you are not to be trusted. So, be sure to provide accurate information when purchasing an auto insurance policy.

When comparing auto insurance options, you should research which carriers offer discounts. The following are some common discounts offered by insurance providers:

  • Insure multiple vehicles with the same carrier
  • Take defensive driving classes
  • Increase deductibles
  • Buy multiple lines of insurance from the same company

Now that you understand some of the tips for obtaining the best auto insurance rate possible, you should start comparing insurance providers to find the premium that is right for you.

Start comparing auto insurance rates now using the FREE comparison tool below!

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Compare quotes from the top car insurance companies and save!

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