Shopping for car insurance can be challenging, and it’s often tough to figure out how to get the best rates. Understanding the factors that influence insurance rates can help you determine how to get the best price, saving you money in the long run. Read on to learn more about types of coverage, the things that influence insurance rates and how to find the right coverage for your budget.
Factors That Influence Car Insurance Rates
Your specific car insurance rate is influenced by a number of factors, including:
The type of vehicle you drive: a newer vehicle or sports car would be costlier to replace, so the increased cost is likely to be reflected in the price of your policy.
Where you drive most frequently and how much you drive: the more you drive, the more likely you are to be involved in an accident, and that can translate to a higher premium. If you drive in urban areas with more traffic and higher crime rates, this can also increase your premium.
Your own driving record: if you’ve been involved in accidents or have traffic violations on your record within the last few years, chances are that you’ll see higher rates than drivers with a clean driving record.
Your credit history: drivers with poor credit ratings are at a higher risk of letting their insurance coverage lapse, and credit ratings are often used as a predictor of the total number of claims and the costs of those claims.
Your demographics, including age, gender and marital status: young drivers are statistically more likely to be involved in accidents, so they generally see higher rates than older drivers. Other factors, like gender and marital status, can also impact your rates.
Types and Amounts of Coverage
The required minimum car insurance coverage varies by state, and certain coverages can be more expensive than others. Types of coverage can include:
Property Damage Liability – coverage that typically covers damage to the other driver’s car, as well as damage to things like homes, storefronts, mailboxes or fences. This coverage usually applies if you or a driver on your policy causes an accident that damages another person’s property.
Bodily Injury Liability – coverage that helps cover the cost of another person’s injuries, including medical expenses (and your legal services, if applicable). This protects you financially if you or another driver on your policy is responsible for an accident where another person is injured.
Personal Injury Protection – this coverage varies by state, and is referred to as PIP coverage or no-fault insurance. It helps you and your passengers pay for expenses that result from an accident.
Uninsured Motorist Coverage – coverage that helps pay for your expenses in the event that you’re in an accident caused by an uninsured or underinsured driver, or if you’re the victim of a hit-and-run where the driver cannot be identified.
Depending on your situation, you may want to purchase additional coverage, including comprehensive and collision, rental reimbursement or accidental death coverage. Additional coverage can increase your premium, but could end up costing you less in the long run.
Finding a Plan That’s Right for Your Budget
Some factors that influence the cost of your car insurance are unavoidable, but you have some options to help reduce the cost of your premium and help save you money.
Consider your coverage: depending on your situation, you may not need much additional coverage beyond your state’s minimum required coverage.
Deductible adjustments: a higher deductible means a lower premium, generally speaking. Remember, in the event of an accident, you’ll have to meet the deductible before your insurance coverage kicks in.
Consider possible discounts: some companies offer a wide range of discounts on their premiums, including multi-car discounts, safe driver discounts, good student discounts, mileage discounts and more.
Want to make sure you are getting the right coverage to protect your vehicle, without breaking the bank? Reach out to your local agent with questions, and they’ll be happy to help you find the right car insurance for you, no matter what your situation may be.