Likely Reasons Your Car Insurance Is So Expensive and the Solutions
Do you think that you are paying way too much for your car insurance, especially since you have a clean driving record? No DUIs, no accidents, and you have never made a claim yet you are paying far more than average?
You are probably right. Along with thousands of other Americans, you may be paying way too much for your auto insurance. There are several reasons for this, but you will be happy to know that there are some steps that you can take to lower your rate.
It’s All About The Risk
One of the primary factors that insurers use to determine your rate is the risk. Risk is assessed according to the probability that you will claim from the insurance provider due to an accident or theft of the insured vehicle. Understanding the risk assessment process and the various factors that influence risk can help provide solutions for a lower insurance rating.
Your Driving Record
Whether you have ever received a DUI/traffic violation, been in an accident or claimed from an insurance provider are three of the primary risk factors that will decide your insurance rate. It follows the premise that if you have been in an accident once, you are likely to be in a crash again.
If you have never been in an accident and your rate is higher than it should be, this is likely because you have been charged with a DUI or have other driving penalties (such as speeding tickets or other traffic violations) against you. If this is also not the case, you have probably claimed from an insurance provider in the past which will increase your rate.
Keep in mind that your current insurance provider will consider your entire driving history and not just your record while they have insured you. So even if you had a speeding ticket 20 years ago, it might still affect your rate. The same goes for claims that you have made while insured with another provider.
While you can do very little to delete your driving record or past claims history, you can ask for your case to be reassessed since you have not claimed for an extended period and have had a stellar driving record for some years. The insurance provider may be willing to consider this.
Your Credit Record
Few people are aware that their credit history, score or record can affect their car insurance rate. A bad credit rating gives the insurer the impression that you may not meet your monthly financial obligation to pay your insurance on time or at all.
While coverage will be suspended due to late or non-payment, your rate could increase as well.
Repair your credit record as soon as possible. Pay off your debt and take steps to have bad debts removed from your credit history.
Driving Activity Record
Your insurer wants to know what the primary use of the vehicle will be and where it will mainly be traveling. If the car is going mostly from your work and back home every day along what is considered to be a safe route, you may receive a lower premium. However, if you spend most of your day in your car driving around what can be considered a dangerous area, this can mean that you will pay a higher rate.
Drive along the safest routes where possible and stick to moving to and from the same destinations and your home. The more reliable the journeys you make, the lower you can expect your insurance premium to be. Less time on the road may also play a role.
Vehicle Safety And Security
Another huge risk factor is the safety and security of your vehicle when it is parked, especially at night. If your car is parked on the street when you are home or in a public parking lot while you are working, this can negatively impact your premium.
Ensure that your car is parked in a locked garage that has additional security measures such as CCTV camera surveillance, a security system, and armed response or patrols whenever possible to lower the risk of theft and therefore your premium. This should be over and above the vehicle’s anti-theft or anti-hijacking security measures that have been put in place.
Flashy, expensive cars are going to cost more in insurance than cheaper cars or even used vehicles. The more expensive the car, the more it will cost the insurance company to repair or replace it. Foreign vehicles are also more likely to incur a higher premium.
Opt for a local, cheaper vehicle as this can significantly decrease your rate. If you have to drive an expensive car, opt for an older model than the latest one. A vehicle that is just a few months old can reduce your rate. Used cars are another alternative solution.
Where You Live And Work
Some locations are considered to be riskier than others. Whether your car is parked or driven in what is considered to be a dangerous or hazardous location, this can impact your insurance rate.
Move to a safer location if possible or change jobs if this is a viable option. In other words, don’t take a knock on your salary or end up paying much more in rent to save a few dollars on your car insurance. Alternatively, upgrade your security measures, and this can lower the risk of living or working in a high-risk location.
Car insurance policies provide a range of different cover options to suit the needs and different budgets of all types of consumers. You can expect to pay far less for basic liability insurance than you would for comprehensive auto insurance. Limits and restrictions applied to a policy will also affect the cost. The higher the limits and the less the restrictions, the more you are going to pay.
Do some research into what the average cost is for liability claims and use this as a benchmark for the coverage you select. Opt for the cover that you need rather than for limits that would be more than what you think you would ever need to claim. Remember that you can always cover any difference, which should be negligible, out of your pocket.
Those Insurance Extras
Auto insurance carriers love to make their products more attractive by adding bonus features such as a free towing service, cracked windshield repair, repairs for dents, and scratches, etc. These added extras are not free and are rarely used or needed, the cost of which is worked into your insurance rate.
Opt for a policy that doesn’t include optional or “free” extra features that you won’t need.
When To Claim
Remember that every time you claim, it will affect your next increase which will probably come about at the start of the new year or on the anniversary of your policy. The more you claim, the higher your hike will be.
Don’t sweat the small stuff and instead claim only when you need to. Pay for any minor repairs such as chips, dents, and scratches out of your pocket and keep your insurance premium low.
Your age, gender, marital status, and some other factors may also play a role in the rate that you get from an insurance provider. For example, drivers under the age of 25 years as well as women and unmarried people will receive a higher rate.
Well, there isn’t much that you can do to change these factors. However, you can opt to stay on your parents’ insurance for as long as possible to reduce the cost if you are under 25 years. You can also choose an insurance provider that does not allow these factors to affect the risk assessment and rate to a large degree.
This said it is crucial to keep in mind that all insurance companies are not created equal and therefore use different rating systems to determine an appropriate premium. While they may use more or less the same rating factors, some may prioritize specific factors in evaluating the risk to a higher degree than others.
It is therefore essential to compare quotes and rates from different insurance companies regularly. However, when making a comparison, be sure to compare the benefits and not just the cost.
In other words, make sure that an insurance policy that appears to be much cheaper on paper provides the same value for your money and similar coverage to the more expensive policy.
Also, take into consideration the limits and restrictions in your comparison and ensure that you understand what the deductible will be when you claim. It is recommended to take all these factors into account to ensure that you get the lowest rate for the best car insurance.