Auto insurance premiums are determined on an individual basis, so often people in the same family or neighborhood could have starkly differing rates. What do insurance companies base individual rates on, and can you influence the cost of your car insurance?
There are several obvious factors like your vehicle, your driving record, and where you reside, but these aren’t the only things determining your monthly payment amount. If you are on a budget and premiums appear costly, you may be tempted to reduce some of your coverage to lower the premium.
However, before reducing coverage and exposing yourself to more risk, you should be aware that numerous factors can affect your car insurance rates, and several you may be able to influence to get a better price.
Your Vehicle
Some cars simply cost more to insure because parts are more expensive, or more difficult to obtain. Still, you may be able to get discounts if your car has certain security features like anti-theft systems or driving monitoring systems installed.
Your Driving Record
How you drive will determine your nova scotia auto insurance costs as providers must determine how much of a risk it is to insure you. If you have been involved in various accidents, you’ll likely pay more than motorists with no accidents on their record. If you are a new driver, you will also pay more due to a lack of experience and the lack of a driving record to evaluate.
Providers generally look at your driving record for the last three to five years. If your history includes multiple at-fault accidents, traffic citations, or DUI convictions, not only will you pay more but you may have difficulty finding a provider.
How Much and How Often You Drive
Insurance providers will inevitably look at how much you will be driving. Motorists with a long, daily commute will generally pay more than those that use their cars sporadically. The longer you are behind the wheel, the more risks you run.
Where You Reside and Where You Park Your Auto
Your residence is important because it is also where you park your car. Crime, vandalism, and even weather can contribute to insurance costs. Cities or highly populated areas will generally have a higher cost than rural areas because there will be more cars on the road. The statistics for accidents, car thefts, and acts of vandalism will be higher, influencing insurers to raise premiums.
Your Age
Statistically, mature motorists are involved in fewer accidents than younger drivers with less experience. Insurance policies for teen drivers and those under 25 are significantly more expensive.
Your Gender
Statistics also indicate that women are involved in fewer accidents and those accidents are less serious than those involving men. Women also have fewer DUIs than men known as driver-under-the-influence. So, women may benefit from lower insurance premiums.
Your Credit Score
A credit-based insurance score is another statistical tool that providers use to predict how likely you will file a claim and the expense involved with the claim. Providers maintain that your credit history can predict how likely it is that you will file a claim. This method is banned in several states.
The Coverage You Select
The number and types of coverage you choose will also help determine your insurance premium. Many states have minimum car insurance requirements, especially for liability. Coverages that are available for car insurance generally include
- Liability coverage pays for injuries and property damage, as well as legal defense should you be sued.
- Collision coverage pays for any repair expenses due to a car crash.
- Uninsured / Underinsured motorist coverage is mandatory in some states and optional in others. This will pay if you are hit by a motorist without insurance, or with insufficient insurance.
- PIP-Personal Injury Protection covers the cost of injuries to your passengers and to yourself. No-fault insurance states generally require PIP because suing for damages is limited.
- Medical payments coverage will vary by state but pays for medical expenses, lost wages, and other costs if you are in a car accident.
- Comprehensive coverage will reimburse repair costs due to vandalism, theft, fire, collisions with animals, floods, hail, and falling debris or objects.
Optional coverages available are roadside assistance, rental cars, accident forgiveness, labor costs, or gap insurance if you have a car financing loan.
The kinds of coverage you must have will be determined by the state you live in and will vary from state to state. Twelve states have enacted no-fault insurance laws. These states make PIP coverage mandatory so rates will likely be higher. No-fault states include Massachusetts, Florida, Kansas, Pennsylvania, New York, Minnesota, Hawaii, New Jersey, Kentucky, North Dakota, Michigan, and Utah. Several other states also require PIP without no-fault laws.
SR-22 Insurance
Among some state-specific requirements is the SR-22 insurance or proof of financial responsibility which will influence premium costs. It is not the certification that causes premiums to levitate but the violation that caused the SR-22 to be required of you. It is estimated that premiums rise an average of over $750 annually if an SR-22 is ordered.
The need for SR-22 certification is ordered by the state or a court. The requirement of this certification can be due to
- A DWI or DUI conviction.
- Driving without car insurance.
- Multiple traffic violations or at-fault accidents.
- Repeat violations within a short time.
- A hardship license to drive to and from the workplace after a suspended license or a revoked license.
- Not having paid child support that is court-ordered.
With an SR-22 requirement, insurance rates generally increase because motorists are considered high-risk drivers.
Coverage Limits and Deductibles
A coverage limit is the maximum dollar amount that your insurance provider will pay in the event of damage or loss. Normally, individual types of coverage will each have a stated limit. You may be able to adjust this with your provider when stipulating a policy if you have specific needs. The more types of coverage you purchase, the higher your premiums will be.
A deductible is an amount you agree to pay out-of-pocket before your insurance coverage begins paying. A higher deductible may get you a lower premium, but you should be sure that you have the money set aside to pay deductibles in the event of an accident. Deductibles must be paid before a provider will make a payout.
Non-Driving Considerations
Insurance providers will also consider various other factors like if you own your home, are married, your occupation, and your education although they may be considered discriminatory by some consumer advocacy groups.
Car Insurance Premium Factors that You Can Influence
Although you cannot change your gender or age, you can work on your credit score and driving history. If you live in a city, a garage may help with risks relevant to parking. Safe and responsible driving can amount to noteworthy savings when it’s time to purchase or renew insurance.