Factors That Affect Your Car Insurance Rates
Before you go shopping for cheap car insurance, you should be aware that there are several factors that may affect your premiums. Insurance companies calculate auto insurance rates based on your age, gender, marital status, location, driving experience and credit score. The number of miles driven each year, as well as the type of car you own may influence your rates.
Age – The youngest and the oldest drivers are more likely to get involved in car accidents. That is why they usually pay more on auto insurance. After the age of 25, drivers can see a decrease in their rates.
Gender – Women are safer drivers, so they get lower premiums than male drivers.
Marital Status – Insurance companies believe that a married person is more responsible. In addition, married couples usually buy insurance for more than one car, which helps them receive a discount.
Location – People who live in rural area spend less money on car insurance than those living in big cities or suburbs.
Type of Car – Sports cars and luxury vehicles cost more to insurance than traditional cars. Insurance providers look at the likelihood your vehicle will be involved in an accident or stolen and how much it will cost to replace or repair.
Mileage – The more you drive, the more likely you are to get involved in a car accident. If you only drive occasionally, you will qualify for a low mileage discount and save money on auto insurance.
The rates you will pay on car insurance also depend on your occupation, years of driving experience, driving record, accident claims and history of bankruptcy. Although you have no control over some of these factors, there are a couple of things you can do in order to get the best rates on your car insurance policy.
Types of Auto Insurance
When shopping for cheap car insurance, it is important that you do a little research to learn more about the different types of coverage out there. Each state has minimum coverage requirements, but you need to evaluate your options and buy a policy that serves your interests. Here are the main types of auto insurance:
Liability Insurance
Most states require drivers to carry liability insurance. In the event of a car accident for which you are responsible, this type of insurance covers the medical bills, as well as the cost of repairing a house or any other property damaged in that accident. You may opt for bodily injury liability or property damage liability insurance. In case you decide to buy liability insurance, opt for a large amount of coverage. If you select limits that are too low, you will be required to pay out of the pocket for the amount above your limits. It is recommended that you purchase higher levels of coverage if you have a lot of assets to protect.
Collision Insurance
This type of auto insurance coverage pays for damage to your car as the result of a collision. The policy covers repairs, towing and other expenses less the deductible you choose. Insurance companies will only pay the value of your car.
Fully Comprehensive Car Insurance
As its name suggests, fully comprehensive car insurance offers extensive coverage in the event of an accident. This policy insures you against damage to your car, but it also covers medical bills, accidental damage, theft and fire. Since most insurance providers refuse to insure 100% of the value of a car, make sure you read the small print on your policy in order to find out what is included.
Uninsured/Underinsured Motorist Bodily Injury
These two types of auto insurance pay for injuries to you and your passengers, as well as medical expenses and other damages caused by a driver who has little or no insurance. In some states, the number of uninsured drivers can reach 25%. Therefore, you should do some research and decode whether you need to buy this type of coverage or you can go without it. The amount of coverage you will receive when buying this type of insurance depends on the limits you choose. Keep in mind that the limits required in some states usually provide insufficient coverage.
Personal Injury Protection Coverage (PIP)
If you buy Personal Injury Protection coverage, the insurance company will pay for medical bills, funeral expenses, child-care expenses, lost wages and other damages. Consider buying both Personal Injury Protection and health insurance in order to be fully protected. Personal Injury Protection coverage is mandatory in some states, including Delaware, Florida, Kansas and New York.
Medical Payments
This type of coverage pays for medical expenses resulting from a car accident, regardless of who is at fault. If you already have health insurance, medical payments coverage may not be necessary. Make sure you know your state’s requirements before buying this policy.
Ways to Save on Car Insurance
Regardless of what type of car insurance you choose, there are many ways to cut costs and save money on your policy. Drivers can save hundreds of dollars on auto coverage simply by comparing three to five quotes from different companies. Most insurance carriers are willing to offer massive discount for buying a policy through their websites, adding safety features to your vehicle or raising your deductibles.
Compare Car Insurance Quotes
With a few mouse clicks, anyone can compare dozens of car insurance quotes from leading companies. The best part is that you can get as many quotes as you want without paying a dime. Evaluate your budget, comparison shop rates from at least 5 different car insurance companies, and then complete a short application form. Be sure to provide honest answers in order to get cheap car insurance quotes that fit your budget.
Research Your Options
Based on the answers provided, you will receive a number of quotes. Compare them side-by-side, choose at least five offers, and then make a list of insurance providers. Contact your state insurance department to research the company you are interested in. Some websites feature insurance company comparison charts that can help you compare multiple providers and give you an idea of what the normal price should be.
Increase Your Deductibles
Once you find a cheap car insurance policy that works for you, start looking for ways to cut costs. It is recommended that you raise your deductibles to get lower rates. The deductible represents the amount of money you have to pay before the insurance provider will cover the damages resulting from a car accident. Increasing your voluntary excess can help you save up to 50% on auto insurance every month.
Maintain a Good Credit Record
Make sure you pay your bills on time and get rid of debt before purchasing car insurance. Having a bad credit history often results in higher auto insurance rates. An outstanding credit rating will help you get a good deal and find a policy that fits your budget.
Take Advantage of Discounts
Increasingly more insurance companies are offering discounts and incentives. They provide club membership discounts, defensive driver discounts, good student discounts and low mileage discounts. Drivers are encouraged to apply for more discounts at once. Make sure you ask insurance providers about the discounts that are being offered.
Bundling Discounts – If you get your car insurance, life insurance and health insurance from the same provider, you will receive substantial discounts.
Low Mileage Discounts – Some insurance carriers offer reductions to those who drive a lower than average number of miles a year.
Defensive Driver Discounts – No mater how old you are, taking defensive driving classes can help improve your driving skills and get cheap car insurance. This discount can represent as much as ten percent off on your rates.
Good Driver Discounts – Safe drivers with no traffic offenses within a specified time period get lower premiums.
Safety/Anti-Theft Equipment Discounts – One of the best ways to get cheap car insurance is to install approved alarms and anti-theft devices to your vehicle. You can save even more money on your policy by adding air bags and automatic seat belts.
Multiple Car Discounts – If you have two or more vehicles, it would be better to insure them with the same company.
Military Discounts – Most companies offer lower rates to current members of the military.
Good Student Discounts – Having good grades at school can help you get auto insurance for less. This discount is available to students and graduates under the age of 25.
Club Membership Discounts – Being a member of certain organizations and clubs can result in lower car insurance rates.
Retirement Age Discounts – Senior citizens are less likely to get involved in a car accident. If are over 50, you might qualify for a Retirement Age Discount. Make sure you compare several insurance providers to find out which of them offers the best deal.