Cars don’t come cheap so it’s no surprise that choosing the right car insurance is a pretty big deal. No matter how you go about it, shopping for the best car insurance can be a complicated process. Even though the internet has made it easier than ever to compare policies and prices, the insurance jargon can be tough to follow, which can throw a wrench in the decision-making process.
As far as the insurance companies go, there are a lot of factors regarding the vehicle that they will consider before setting a premium, such as:
- Make and model.
- Age
- Body type
- Engine size
- Cost to repair
- Probability of the car being stolen
If you happen to have any traffic tickets or violations on your record, those marks could affect your car insurance rates as well.
For smoother sailing, here are some things you should know about before getting a car.
How Car Insurance Prices Are Established
The process of calculating insurance premiums for customers is unique to each car insurance company, but for the most part, they decide using a few basic items.
The most talked-about factors include: the vehicle’s make and model, how often you will be using the vehicle and what for, and your driving record.
A few other deciding factors that get reviewed are:
- Your age, gender, and marital status: This is because statistics have shown that teenage drivers and male drivers have a higher likelihood of being involved in a car accident. Alternatively, married drivers are less likely to file an accident claim than single drivers. Insurance companies keep track of these numbers in order to stay on top of the risks.
- The area that you live in: Policyholders that live in an area with through-the-roof crime rates are viewed as posing a higher risk of theft, break-ins and vandalism. Car Insurance companies view these areas as risky in comparison to a rural neighborhood with lower crime rates.
- Your credit score: Believe it or not, most states allow car insurance companies to check your credit score when determining premiums. According to industry research, there is data associating drivers who have good credit scores with less car accidents. If you are worried about your credit score, make sure to check to see what the law is regarding this issue in your state.
Comprehensive Coverage And Collision Coverage
As far as insurance coverages go, these two are the main types. They each cover different sets of circumstances to protect your car from damage. It’s important to note that these types of coverages will not cover damage that you cause to another driver’s vehicle. In a case like that, you would need to have liability insurance.
In a nutshell, comprehensive insurance coverage will cover the damage inflicted from things like fires, theft, vandalism, falling objects, and natural disasters.
Collision insurance coverage, on the other hand, is exactly what it sounds like. It’s the coverage that will assist you in paying for the repairs once your vehicle has been impaired due to a traffic accident.
While these two types of coverages aren’t technically required, you will need them for your vehicle if you plan on taking out a loan or signing a lease agreement.
An Expensive Vehicle Won’t Always Mean More Expensive Insurance
Just because you purchased a vehicle with a hefty price tag, doesn’t mean that your insurance is going to cost more than it would have on a much cheaper model. For example, if you were to purchase an expensive vehicle that had better claim rates for accidents or thefts than a cheaper vehicle, the insurance premiums could end up being cheaper.
To give you some perspective, it matters less about the expense of the car itself and more about how expensive it would be to repair, the likelihood of it being stolen, and so forth. If the car is very safe and protects its passengers effectively, then your insurance company won’t have to fork out as much money to repair it after an accident.
Tips And Tricks For Cutting Down Insurance Costs
If you’re not feeling particularly fond of your insurance bill, there are ways you can salvage some of that monthly cash. Here are a few ways to save money:
- Scale back on some of your coverage. If you have an older car that’s already paid off, consider taking away the comprehensive coverage.
- Raise your deductibles. Since your deductible is what you are responsible for paying before the insurance takes over, raising your deductible could lower your monthly bill by up to 40% or higher.
- See what kind of discounts your insurance company has to offer. Some companies offer price reductions as a reward for things like having low-mileage, owning more than one vehicle, being a safe driver, and many others. If you own a home, consider asking your insurance company about bundling and whether or not it could save you some extra cash.
As you can see, there are various factors that go into an insurance quote once you’ve purchased a car. If you are concerned about insurance prices being too expensive, do your research and shop with these tips in mind.