There are many calculations that are used in determining what someone’s insurance rate premium will be. What insurance companies usually do is take those key factors, plug them into their system, and see what rate category those variables put the person into. There are many ways you can save on car insurance premiums. Three of them, including your age, what type of car your driving, and your zip code, have the most impact.
Your age plays one of the most important roles in determining factors in your auto insurance rates. There are two age categories that concern the insurance companies the most, the elderly and the youngest drivers on the road. According to the Insurance Institute for Highway Safety, teenage drivers represent one of the biggest hazards. They state that a combination of immaturity, speeding ticket fines and lack of driving experience makes them dangerous, leading to a much higher tendency for crashes. And for that, young drivers are charged a much higher premium. Your age is a key variable, but it is also one you can’t control. Many drivers see rates decline when they reach 25, providing they have maintained a safe and ticket-free driving record.
The second factor is what you are insuring. The type of vehicle you drive may make a big difference. It costs much more to repair or replace an Escalade SUV, for example, than it does an old pick-up truck. Some vehicles are also more likely to be stolen than others. Certain models, such as the Honda Civic, Accord and Toyota Camry routinely make the list of the top stolen vehicles. Additionally, vehicles with high horsepower may be seen as riskier, because you may drive faster. This can lead to crashes; therefore the insurance may be higher. Driving a full-size sedan that is a few years old may provide the best rates.
Your zip code also impacts your auto insurance rate premium. Where you live can be the difference of thousands per year. This is because some zip codes are more prone to having a high auto theft rate. It may also impact the amount of driving you. It could make you have a longer commute to school or work, and the more you drive, the more your rate will be. An ideal solution is to try to live in a zip code that doesn’t have such a high theft rate and try to live closer to where you work, go to school, and do some of your shopping.
These factors are important in helping to determine what rate you will be paying. Knowing what contributes to the rates is helpful in taking steps to reduce them.