When it comes to car insurance, the more we can save money, the better. This is why it’s important for you to understand how auto insurance works and to know the factors used by insurers to set policy costs. With these facts and tips, you’ll be able to save money by lowering your insurance rates without sacrificing coverage!
Keep in mind however that different insurance companies treat the following factors differently, so it’s best to do your research and shop around so you can obtain car insurance quotes from various providers before you make your decision.
Age
Insurers make use of statistics from previous customers to calculate how risky you are as a driver, and the age group you belong to is a major determinant. According to statistical data, young drivers are more likely to figure in a car crash and therefore make insurance claims with the help of their lawyers more often than other age groups. Thus, over-50s car insurance tends to be categorized differently by certain insurers. This means that if you are between the ages of 17 and 25, you will most likely face the highest premiums. You can, however, take steps to lower your insurance costs by opting for black box insurance, which monitors driving behaviour and gives discounts to safe drivers.
Residence
Where you live is also a factor in determining insurance costs. If you live in a densely-populated area where the risk of car theft, accidents, or vehicle crime is high, you will most likely pay more for insurance. You can lower the cost of insurance by investing in a secure parking area for your car, safety devices or, if possible, keeping it in a garage.
Occupation
Certain jobs are tagged with a greater risk of claims, such as delivery drivers who are constantly on the road and are therefore more likely to be in an accident.
Driving Record
Drivers who have not made any claims for a year or more can apply for a no-claims bonus. If you have a clean record, you’ll have lower insurance costs. This is why you should always be careful when driving. Young drivers who thoroughly learn the laws of the road will be better placed to save money by being safe drivers – while anyone who comes across a situation, hazard or road sign that they are unsure of can easily refresh or update their knowledge using readily available online resources.
Vehicle type
The kind of car you drive also has a significant effect on the cost of insurance. In general, the more expensive the car is, the higher the premium because it would be more costly to replace if written off in an accident or if it is stolen. Cars with a high price tag also cost more to repair, especially if spare parts are hard to come by or expensive. Faster cars, or cars with more power, are also more costly to insure as statistically, these are more likely to be involved in road accidents. Desirable cars—sports cars, luxury cars, rare cars—are also more costly to insure, as they pose a greater attraction to thieves and have a higher value to put at risk in the first place. Owners of desirable cars can lower their premiums by improving their vehicles’ security, such as installing an advanced alarm system.