The average annual cost of car insurance is about $800, but there is a considerable variation because many things affect the price of a policy. All of the factors that affect the price of a policy help determine how likely you are to have an accident.
What is most surprising is that many factors in analyzing those possibilities are better at predicting that you may have an accident than your driving record. However, not all insurance companies use all of the predictors listed, and some companies may use others that are not included. In general terms, the price of your auto insurance policy may vary depending on any of these factors in no particular order of importance:
- Your driving record or driving record.
The better your driving record, the lower your car insurance premium. If you have traffic violations, tickets, or vehicle accidents, you will likely pay more for your insurance premium than if your record is accessible. You may also have to pay more for your insurance premium if you are a new driver, just got your driver’s license, and haven’t had auto insurance for several years.
- How much do you use your car, and how many miles you drive annually.
The more miles you travel, the more likely you will have an accident. If you use your car to work or drive a long distance, you will pay a little more than if you only use the vehicle occasionally, known as pleasure use. In which case, you will pay less for auto insurance.
- Where you live and where you keep your car.
Where you live and where you park your car can affect the cost of your car insurance premium. Due to higher chances of vandalism, theft, and accidents, urban areas tend to be more expensive for auto insurance than smaller cities, towns, and rural areas.
Other factors that vary from one area or state to another include the cost of litigation in the area, costs of vehicle repair expenses and charges of medical services, widespread automobile insurance fraud, and the climatic characteristics of the site.
- The age of the driver.
Mature drivers have fewer accidents than less experienced drivers, especially teenagers. Therefore, insurers usually charge a higher premium for young people who drive or if there are people under the age of 25 in your family who drive your vehicle.
- If the driver is male or female.
As a group, statistics show that women are less likely to be involved in an accident or drive under the influence (DUI ) and have less severe accidents than men. That occurs while men move. Of course, this depends on the individual specifications and driving history, which will have a more significant impact than generalities on how much car insurance will cost.
- The type of insured car you drive.
Some cars are more expensive to insure than others, depending on many variables, such as the possibility of theft, the cost to replace the vehicle, the cost of repairs, and the vehicle’s safety features and performance. Things like engine size can influence how much you’ll pay for insurance, even for the same models or brand. Cars that have high-quality safety features may qualify for some specific premium discounts.
Insurers look at how safe a vehicle is for those driving or riding in it and how much damage that car can inflict on another car. If one car has a higher chance of inflicting more damage on another or its occupants in an accident, the insurer may decide to charge a higher liability insurance premium.
- The credit of the insured.
For many insurers, an insured’s risk score based on the driver’s credit history is one of the most valuable tools in predicting the likelihood that a person will file an accident claim with their auto insurance company. Credit histories used in insurance are based on credit information that includes the person’s payment history, if they have delinquent accounts, if they have declared bankruptcy, how much debt they have, and how long they have a credit history. For example, a credit history that shows timely payments on credit card bills and mortgage payments has a positive effect on the use of credit history for insurance,
- The type and amount of insurance coverage the driver purchase.
In almost every state in the country, a driver is required to carry minimum liability insurance coverage by law. Each state determines the needed coverage limits in the state, and they are generally deficient, and the vast majority should consider purchasing more than the minimum required coverage. The amount of coverage recommended is usually ten times more than the minimum required by state law.
Buy a new car or a late model (or finance the vehicle). You will most likely purchase collision coverage and non-collision or comprehensive coverage, which repairs or replaces the car for damages it suffers due to weather, theft, physical damage, etc. Collision and comprehensive coverages are subject to a deductible, and the higher the deductible, the less you pay in premium for that portion of the insurance. Although there is no legal requirement that you purchase collision or comprehensive coverage, the finance company may contractually require you to buy it if you finance the vehicle.