Auto insurance is an important purchase to protect assets, and certain types of coverage are also required by law. Since car insurance is compulsory, each driver must pay for a policy.
But how much exactly will the coverage cost? Auto insurance premiums can vary for many reasons, but here are five of the biggest factors that affect the price of auto insurance.
1. Driving record
The policyholder’s driving record is the most important factor affecting auto insurance premiums. This is because auto insurers price policies based on the risk of having to pay a claim. A driver who has a history of unsafe behavior, as evidenced by a series of accidents or speeding tickets, is much more likely to cause a crash that results in the insurer having to pay out money.
Insurers will ask about previous accidents, traffic violations, or issues like drunk driving convictions. The more black marks on a motorist’s record, the higher the premiums. And in some cases, many past problems could even result in a denial of coverage when applying for auto insurance.
2. Other drivers on the policy
Many people who buy auto insurance coverage have other people in their household who will also be driving. This could include, for example, spouses or children. Since the auto insurer could be stuck paying a claim if these other drivers cause an accident, the insurer will want to know who else might be behind the wheel and what her driving record looks like.
Unfortunately, this can mean that people with teenage drivers in their household, or whose spouses have been in many accidents, could end up paying much more for a car insurance policy.
3. The scope of coverage
The amount of auto insurance coverage a motorist purchases also affects premium costs. After all, if a driver gets more protection, such as a liability policy that pays more than the minimum or a comprehensive policy that pays for losses caused by theft or causes other than accidents, then there is a greater chance that a insurer will end up having to pay a lot of money if a claim is filed.
In many cases, it actually makes sense for drivers to pay higher premiums to get more than the minimum required auto insurance coverage. This allows motorists to ensure that they are protecting their assets and will not face out-of-pocket losses if the worst happens.
4. Location of the house
Where a driver lives can affect the chances of accidents or other problems with the car, such as vandalism or theft. As a result, insurers want to know where the motorist lives and whether the car will remain in a garage. If a neighborhood is not very safe and there is a higher chance of a problem, insurance premiums will be higher.
5. Choice of vehicle
Finally, the driver’s choice of cars affects premiums. Some cars are safer than others, and some cars are more likely to be stolen than others. If a particular car has a higher-than-normal accident rate or is especially likely to be targeted by thieves, costs could increase.
Drivers need to be aware of all of these factors so they can take steps to try and avoid unnecessarily increasing their car insurance costs. By choosing a vehicle carefully and avoiding a history of accidents, motorists can ensure premiums remain as affordable as possible.
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