Drivers are grouped according to the level of risk each one poses-i.e., the amount of loss incurred by insurers within categories of policy holders. For various reasons, drivers are categorized by:
The cost of your insurance policy is based on the average cost of covering actual losses, spread out over your particular “rating group” as a whole. Of course, you may never have an accident or have your car stolen, and therefore will never need to be compensated. But others in your category may not be so lucky. Your premium will help to pay for their losses, just as their premiums would help to pay for yours.
For example, if you are a 23-year-old man and you park your new sports car on a downtown street in a large city, you will likely pay more for insurance than a 37-year-old woman who parks her four-wheel-drive in the suburbs, simply because, based on average losses, you have a greater chance of having an accident or being the victim of auto theft.
Where you live (or, more precisely, where you keep your car) has a bearing on your chances of having an accident or becoming a victim of theft or vandalism. Thats why a vehicle owner in Brooklyn, New York, pays a higher rate than the owner of an identical vehicle in Casper, Wyoming.
Other factors affecting regional insurance rates include
Vehicles are also grouped into categories according to their likelihood of being damaged, vandalized or stolen. Insurers generally consider the size and type of vehicle, as well as the value and the cost of repairs (which can vary greatly, even on vehicles that cost roughly the same). Thus, a new station wagon is expected to hold up better in an accident than a sports car or a subcompact.
Putting insurance aside, safety is key when buying an automobile. Your life depends on it! Some cars are considered safer than others because of their performance record in safety tests and real accidents.
That’s why you should research insurance coverage before you buy your car. It helps you to understand the actual cost and indicates those vehicles with good safety records. Your insurer will ultimately reward you for putting safety first.
Insurers often discount their rates for good drivers and those who take of safety and security precautions. Depending on the insurer, you can often lower your rates from 5 to 35 percent.
Sometimes the investment you make in your vehicle is worth the discount, and sometimes its simply worth some peace of mind. For example, the purchase of anti-lock brakes merits a discount from nearly every insurer, but the discount probably will not pay for the brakes during the normal life of your vehicle.
A agent can give you information about which insurers offer discounts.
You can also lower your insurance rates by requesting higher deductibles (the amount of money you pay before you make a claim). Increasing your deductibles on collision and comprehensive coverage from $100 to $250, or even $500, will bring your rates down. Moreover, you may not need collision and comprehensive coverage if you drive an older car.
Ask your agent which discounts are available to you.
The more people you allow to drive your vehicle on a regular basis, the greater the chances of your vehicle being in an accident. Teenagers are especially expensive to insure because they are the least experienced drivers.
A drivers education course can help ease the burden of insurance costs since it teaches your teenager defensive driving techniques. If your childs high school does not offer drivers education, try to find one offered by another school or a private firm in the area. After all, the cost of drivers education could be cheaper than the extra cost of your insurance. (Many insurers offer “good student” discounts as well.)
An adults driving experience can also affect your rates significantly. Dont assume that every adult you know has been driving since age 16 or is a competent driver with a clean record. Again, taking a defensive driving course is a good way for adults to prove they are responsible drivers, thus lowering their risk and their insurance rates. (This is a great solution for new couples who are jointly insured but unmatched in their driving skills or experience.)