Whether you are going to be driving soon, or you have been on the road for a while, you might be wondering what factors affect your car insurance rates.
Believe it or not, the cost of your auto insurance will definitely fluctuate throughout your lifetime. However, there are a number of things that you can do to try to keep your rates down.
Here are some car insurance basics you should know about.
Age
If you start driving in your late teens, you will likely see a gradual decline in car insurance rates until you are around 65. After this, there tends to be a slight uptick in cost from year-to-year.
This is because insurance companies know that you are at a greater risk for accidents throughout different phases of your life. Of course accidents can happen anytime, anywhere, to anyone, but research shows that drivers ages 16 to 19, for example, are more than three times more likely to get in a car accident than other drivers.
The average annual car insurance premium for a 16-year-old driver is just under $7,000. It decreases to just under $4,000 by the time the driver reaches age 20.
In terms of the national average for age, insurance premiums drop a little each year. Your best rates will be at around age 50. At this point, the average American pays less than $2,000 per year in car insurance premiums.
Maturity has a lot to do with this. Those who have been driving for more than 20 years likely have acquired better judgment on the road, as well as the patience required to avoid an accident. They may, for example, allow other drivers to pass on a crowded two-way street rather than take the risk of a collision.
As you get older, however, research has shown that you’re more likely to have slower reflexes. You can expect a slight climb in insurance premiums after your 65th birthday. However, the average annual cost for car insurance at the age of 85 is still less than $2,500, so your rates won’t go nearly as high as they were when you were a newly-licensed driver.
Your State
The state you live in will also have an impact on your car insurance rates. States like Michigan, New York, and Louisiana, for example, are more expensive to drive in. The least expensive states include Maine, Idaho, and Iowa.
In some states, such as New York, the reason why insurance rates are so high is the dense population. In others, it is due to no-fault insurance laws.
The number of annual vehicle thefts and uninsured motorists will also play role in determining your insurance premiums. In addition, you can expect severe weather conditions, such as hurricanes, to factor in.
Gender
Gender can also influence your car insurance rates based on research.
For example, male drivers under the age of 20 will pay extremely high rates. By the time you reach 30, the rates for males and females becomes more even. Around the age of 45, male drivers tend to pay a bit less in insurance rates than female drivers.
Your Driving Record
As you might expect, your personal driving record will also impact your insurance premiums. Your costs can go up anywhere from 20% to 200% if you have traffic violations or car accidents on record in the last 3-5 years.
The severity of your traffic violations, as well as previous convictions, will play a role in determining your insurance costs. Multiple infractions can raise your costs significantly.
The good news is that some insurance companies will begin to stop looking at these violations after around 3 years have passed. If you’ve had a bit of a checkered driving record, but have learned to play it safe, you can begin anew if you shop around carefully.
Taking an online defensive driving class can also help to bring your rates down. Check with your local Department of Motor Vehicles to see how you can take a class that will help you get better rates.
How Much You Drive
Your annual mileage can also increase your insurance rates. It’s simply probability that the more you drive, the more likely you are to get in an accident. You will probably pay more if you have a longer commute or travel often. One of the biggest credits or discounts that you can add to your car insurance policy is that of “telematics.” Telematics are the various ways that companies manage your driving mileage and habits. Some companies used to have technology that you installed on your car to utilize these systems. Nowadays, they are simply Apps that you can download to your smartphone. When the app picks up that you are now working from home, or no longer driving as much, this is the best way to receive a credit on your bills. (Sometimes the credits can be upwards of 50%).
Credit History
Believe it or not, your credit history can also impact what you pay in car insurance premiums. In most states, those drivers who have a poor credit history will pay significantly more in car insurance rates. This is because research shows they’re more likely to file a large claim.
Some states, on the other hand, will prevent car insurance companies from factoring your credit history into your determined premium. These include California, Massachusetts, and Hawaii.
Marital Status
Another situation most people are unaware of, whether or not you’ve tied the knot will impact your car insurance premiums. In fact, research shows that married drivers are 50% less likely to get into accidents than single drivers.
Zip Code
Your car insurance premiums could fluctuate depending upon where you’re parking your car while you’re working or sleeping. Some areas, for example, are more likely to have thefts. In others, crowded streets make it more likely that you’ll get into a car accident.
Zip codes in rural areas tend to have less congestion and crime. So, your zip code could save you big bucks if you move to a less populated area.
You might have noticed a rate change after a recent move. Even if you move down the street, you can expect a slight uptick in your auto insurance due to research showing you’re more likely to be in an accident after a major life change.
Car Insurance Basics
Researching, Purchasing, and continuing to pay for car insurance is no small task. Once you learn about car insurance basics, you can figure out what elements of your driving are pushing your monthly costs up. Some simple changes can help make your payments more reasonable.
Don’t stop getting smart about your car insurance now. For comprehensive policies in your area, contact us today. We’ll work with you no matter what phase of life you are in to ensure that you’re receiving the best coverage at the best rate.
LEGAL DISCLAIMER
Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
