What Makes Auto Insurance So Expensive (And How To Lower Your Premium)
Auto insurance is a necessity if you want to protect your car and avoid spending a fortune on repairs. The fact is, auto accidents happen all the time, and you could be involved in one through no fault of your own whatsoever. It’s not even just accidents that auto insurance helps you with - what if someone opens their door onto your car in a parking lot and causes a dent or scratch?
Without insurance, you could end up in serious financial turmoil, though there is one troubling thing on your mind: why is car insurance so expensive? It’s costing you a few thousand dollars to insure your car for a year, but that’s not how it needs to be. Today’s guide will help you out by covering what makes auto insurance so costly and how you can keep your premiums low.
1. Your Driving Record & Age
When car insurance companies start making a quote for you, the first thing they consider is your driving record/history and age. Primarily, three questions come to their minds:
How old are you?
How long have you been driving for?
Have you been in any accidents?
Have you received any traffic violations?
Young drivers can expect to have a higher insurance premium simply because they lack experience - and younger drivers are amongst the top percentile for accidents, so insurance providers see them as a big threat. The longer you’ve been behind the wheel of a car, the lower your insurance premium drops, so there’s not a lot you can do about either thing other than be patient.
As far as the other two factors are concerned, getting involved in accidents will always increase your premium (even if you don’t file an insurance claim) because it makes you seem reckless. Insurers will think you’ve got a greater chance of filing a claim and costing them money, so they ramp up the price. The same is true for traffic violations - if you get lots of traffic tickets, it indicates that you’re not a very responsible driver and carry a high risk.
Solve this - and reduce your premiums massively - by driving safely and obeying the laws of the road. This will stop you from getting into accidents and receiving any traffic violations. You should also consider fighting your traffic tickets, as some can be revoked and wiped from your record. You’ll find that beneficial if you think you were unfairly given a ticket, and this means your insurance premium won’t be affected.
2. Your Car
Unsurprisingly, the car you drive factors into your auto insurance premium - and it’s a pretty big deal. Premiums are likely to go up or down based on:
How old is your car?
How much is your car worth?
Who manufactured your car?
How safe is your car?
How easy is it to repair your car?
As you can imagine, expensive cars from luxury brands will always be the most costly to insure. They will cost more money to repair if damaged - and they also have a higher chance of being stolen. That being said, cheaper cars can also cost a fortune if they have low safety ratings or the parts cost a fortune to source.
With all of that in mind, one easy way to reduce car insurance is to think twice before buying a car. Do some research and look for the cheapest cars to insure - but also be wary of the most expensive ones.
3. How You Use & Keep Your Car
A relatively cheap car that should be cheap to insure can still cost a bomb depending on how you use it. The three key factors here are:
How many miles do you drive on average?
Where is your car kept during the day?
Where is your car kept overnight?
Now, this is one of the best ways to reduce your car insurance if you’re clever. Think about mileage a lot - calculate your average yearly mileage and then round up slightly when putting it in an insurance form. Many people make the mistake of guessing their mileage, which leads to them putting 10,000 miles down when they only end up driving 8,000. The less you drive your car, the cheaper it is to insure.
If you drive your car to work, try to park in a private parking lot away from the street. If your workplace has a covered garage, then that’s even better. Insurance providers don’t like it when you park on streets, as there’s a higher risk of someone hitting your vehicle. The same goes for when you’re at home: avoid parking on the street, even if it’s right outside your house. Park in the driveway if you can - even better if you have a garage.
One little trick here is to build a carport on your driveway. This gives your car a covered parking space, which genuinely reduces your premium by quite a bit as the insurance provider sees the vehicle as being protected from anything that could fall overhead.
4. Previous Claims History
Have you made any previous auto insurance claims? Even if it wasn’t with the same provider - or the same car - this will impact your premium more than anything else. Making a claim means you’ve cost an insurer money, and they absolutely hate that. As a result, expect to see a higher premium for the next few years to “punish” you for that.
It sucks, but that’s how insurance companies work - and they get away with it.
Your premiums will always be at their lowest if you avoid making claims, which means you should avoid getting into any accidents. It can also be better in the long run to fix problems yourself instead of making a claim - if the money adds up. Some people even find it’s cheaper to hire a lawyer in some car accident cases, which is crazy when you think about it!
5. Your Location
One tiny little factor to add in: your location impacts your insurance premium. Some places will have higher road traffic accidents or car thefts than others, so car insurance ends up costing more. That’s something to think about - sometimes, moving across town can help you save a fortune.
Use this guide to understand auto insurance and what increases your premium more than most. At the end of the day, if you drive smartly and take care on the roads, your premium should gradually decrease with time.
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