The size of your auto insurance premium is based on the insurer’s assessment of how likely you are to make a claim and how expensive that claim might be.
So to arrive at a figure that covers the insurer’s risk yet remains competitive, so they win your business, is a tricky balancing act based on many factors.
Chief among these is your age, which is one of the most significant factors.
Younger drivers naturally have far less experience on the highway than older drivers. So, as a general rule, because they are more likely to be involved in an accident, their premiums are higher than more mature drivers.
Age is one factor that is impossible to alter, and the best way of keeping premiums down at any age is to drive carefully and avoid accidents.
Sadly, if you are a young driver, it is largely a matter of waiting until time passes and you are perceived as a lower risk because you are of a more mature age.
But with a little common sense it is possible to keep premiums down.
For example, making sure your car is fitted with a security device and is a less powerful, cheaper model will attract lower insurance premiums.
Ironically, as we become seniors, our premiums may well increase, because we are perceived as having slower reactions on today’s high-speed highways and crowded streets.
Your occupation is another factor weighing quite heavily in the calculation of your cost because certain occupations mean you spend more time driving, carry valuable equipment or work in high-risk locations.
For that reason, be careful how you describe your occupation.
Obviously, the car you drive will have a large bearing on your premiums. For example, the more valuable the car, the more it would cost the insurance company in the event they have to pay out after it was stolen or completely wrecked.
But, even if you suffer only a minor accident, the more expensive the car initially, the more replacement body and mechanical parts are likely to cost.
Ironically, even if you drive the sort of vehicle that would make Lieutenant Columbo’s car look pristine, it might not lower your premiums by much because the insurers are aware you might do great damage to some other driver’s highly expensive vehicle.
And, clearly, the more powerful the engine in your vehicle, the greater the risk of you traveling at high speed and losing control.
The area where you live will also have an important influence on your premiums.
For example, if you live in crowded New York, you’re far more likely to have an accident – even a minor one – that if you live out in Utah.
Also if you live in a crime hotspot, your premiums will reflect this as will living close to a dangerous stretch of road with a history of accidents.
The main purpose of what you use your car for will also be taken into consideration.
For example, if you use your vehicle to commute daily along a busy highway, your premiums will be a lot higher than if you are retired and only use your car to go to church on Sundays.
Naturally, one of the major factors will be your driving history. So if you have been driving for thirty years without a single accident then your premiums will be far less compared with someone who has had a string of accidents and insurance claims.
But there are some easy precautions you can take to lower your premiums.
For example, putting your car away in its garage or putting it in a security-monitored car park when not in use, could help reduce your premiums.
And you could also fit a security device to prevent theft. And having a dashboard camera, which could provide valuable proof that the other driver was at fault in the event of an accident, could also work in your favor.
But if you do any of these things, make your insurers aware of them as they will help build a picture in the mind of the insurers of a careful car owner who is unlikely to make a claim. And that will help reduce your premiums.
Finally, think carefully about the amount of your deductible. Because the larger proportion of the risk you bear, the lower your premiums will be.
It can be very frustrating if you are a careful driver to have to pay sky-high insurance
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