The cost of car insurance is determined by a variety of factors, ranging from the type of coverage you have to your driving record to where you park your vehicle. If you’ve had any accidents or major traffic offenses, you’ll almost certainly pay more than if you have a clean driving record.
Car insurance prices are influenced by a variety of criteria, including age, driving experience, where you reside, and the sort of vehicle you drive. These facts assist insurance firms in determining the risk of insuring you and your car. Higher premiums imply a higher level of risk. When an insurance company examines your vehicle, it considers its overall safety ratings, potential repair costs, and relevant historical trends such as claims and theft rates for the specific make and model.
Cars with low safety ratings, high maintenance costs, and a high insurance claims rate (for accidents, thefts, and so on) may expect to pay higher insurance premiums. A low vehicle safety rating is significant because it indicates that the driver and passengers are more likely to experience catastrophic injuries in the case of an accident, resulting in more expensive medical or personal injury claims.
Your car add-ons are also taken into account by the insurance when calculating risk and premium. Vehicles with improved features, such as four-wheel drive and bigger engines, cost more to insure since they are more expensive to maintain.
What determines the price of an auto insurance policy?
While not all companies utilize the same criteria, here is a summary of what frequently impacts the bottom line on your vehicle insurance policy.
- Your driving history – The lesser your premium, the better your record. If you’ve had any accidents or major traffic offenses, you’ll almost certainly pay more than if you have a clean driving record. You may also pay extra if you are a new driver with no insurance history.
- How frequently you use your automobile – The more miles you drive, the greater the risk of an accident, so you’ll pay more if you use your car for work or travel big distances. You’ll pay less if you just drive sometimes, which some firms refer to as “pleasure usage.”
- Because of greater rates of vandalism, theft, and accidents, urban drivers pay more for vehicle insurance than those in small towns or rural locations. Where you park your car (on the street or in a secure garage) and anti-theft measures may also have an influence on your bottom line.
Other factors that influence premium prices and can differ from one location or state to the next include: the cost and frequency of litigation; the expense of medical treatment and automobile repairs; the incidence of auto insurance fraud; and weather trends.
- Your chronological age — In general, more experienced drivers, particularly teens, had fewer accidents than less experienced drivers. When teens or young individuals under the age of 25 drive your automobile, insurers often demand a higher premium.
- Your gender – Women, on average, have fewer accidents, fewer driver-under-the-influence (DUI) accidents, and, most crucially, less catastrophic accidents than males. So, all other things being equal, women frequently pay less for vehicle insurance than males.
- The automobile you drive – The cost of your car has a significant role in the cost of insuring it. Other factors to consider are the possibility of theft, the expense of maintenance, the engine size, and the car’s general safety record. Automobiles equipped with high-quality safety equipment may be eligible for premium discounts.
Insurers consider not just how safe a vehicle is to drive and how effectively it protects its occupants, but also how much potential harm it may do to another vehicle. If a given vehicle model has a higher risk of causing damage in an accident, an insurer may charge a higher premium for liability insurance.
- You deserve credit – Your credit-based insurance score, like your credit score, is a statistical instrument that forecasts the possibility of you filing a claim and the anticipated cost of that claim.
- The kind and extent of motor insurance coverage – The limitations on your basic vehicle insurance, the amount of your deductible, and the types and amounts of policy choices (such as collision) that you should have all have an impact on how much you pay for coverage.
- NEVER Utilize RACE OR RELIGION TO DETERMINE INSURANCE Prices — It is prohibited to use race or religion to determine insurance rates.
5 Tips for Choosing the Cheapest Car to Insure
- Avoid Ultra-luxury Cars
Due to their high worth, high-end automobiles, whether large or mid-size, are among the most costly cars to insure. Luxury manufacturers like as Bentley, Mercedes-Benz, and BMW have the largest comprehensive insurance losses, according to the Insurance Institute for Highway Safety (IIHS). In addition, according to WalletHub’s research, a Lexus driver can spend up to $1,000 more in yearly insurance premiums than a Nissan driver.
- Don’t Buy the Newest Model
Newer models command higher rates simply because they are more valuable. According to WalletHub’s study, purchasing a $36,000 automobile may result in spending $1,000 more in yearly insurance rates than purchasing and insuring a $9000 vehicle.
- Steer Away from Sports Cars
Due to their high-performance engines and other built-for-speed characteristics, which make them more likely to be involved in accidents, sports vehicles are usually more expensive to insure. According to the IIHS database, sports cars such as the Lamborghini Huracan and Maserati Granturismo had the greatest crash losses.
- Rethink Hybrids
Because hybrid vehicles cost more to insure than regular automobiles, they are more expensive to insure. Repairing and replacing hybrid car parts is considerably more costly. Consider the hybrid battery for a Toyota Prius, which may cost between $2,200 and $2,600 to repair, not counting labor.
- Watch Out for Popular Models Among Thieves
Vehicles that are appealing to auto thieves, predictably, will have higher insurance prices. According to the National Insurance Crime Bureau, the top five most stolen automobiles are the Honda Civic, Honda Accord, Ford truck, Chevrolet pickup, and Toyota Camry.
There are several methods to save money on auto insurance. However, as you can see, one of the most vital is choosing the proper sort of automobile.