Have you ever stopped and wondered how Insurance companies settle on a particular amount for you to pay every month? For your information, most of these factors have to do with you and your driving habits. With that said, here are the five key factors that affect your auto insurance premiums.
The kind of Car You Drive
This may seem farfetched, but not every car on the road is considered equal by the insurance provider. Some vehicles are considered safer while others are considered risky. Your insurance provider has collected a large amount of data concerning the safety of a number of vehicles to come up with a rating. You are therefore more likely to pay more premiums if your car is more susceptible to theft, occupant injury, or damage.
The Manner in Which You Use Your Car
Driving less reduces the chances of you getting involved in an accident. You therefore end up paying less on insurance premiums if your mileage is low. On the contrary, the more miles you drive, the higher the chances of getting involved in an accident therefore the more you pay. This means the best way to reduce your insurance premiums is to decrease your annual mileage. You can do this by joining a carpool, using public transport, or riding your bike to work once in a while.
Your Record as a Driver
Your insurance premiums will shoot through the roof if you have a poor driving record. Your efforts to become a better driver also put you in the good books of the insurance company. For instance, if you take a defensive driving course, you prove to the provider that you are less likely to cause accidents, which puts you in their good books.
The Existing Conditions in Your Region
Urban areas are prone to accidents, theft, vandalism and other risky occurrences. The rate of accidents in the city is higher due to the high traffic and confusion that is typical of such places. Even if you have a car that is rated safe by the insurance company, the mere fact that you are an urban driver puts you at higher risk than a driver who is in the countryside.
The crime rate in the city is more than triple that in the countryside. The city is a place where carjackers, vandals, and thieves abound. This means you are more likely to be attacked in the city than any other place. Well, expect to pay more for insurance if you are an urban driver due to the potential threats you face.
Your Coverage and Deductibles
When applying for an insurance package, you get to choose the level of coverage and deductibles. It is upon you to decide whether to add more coverage or not. This coverage is non-compulsory because it isn’t a requirement by law. You also get a chance to choose a deductible amount. Basically, the higher the deductible, the less you pay at the end of the month as premium.
These five factors give you an idea why your insurance premium is different from your colleague or friend. Once you understand these factors, you can go ahead and put measures in place to reduce the cost of your premiums per month.
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