Car insurance rates vs. premiums
The first thing to know in order to reduce how much you pay for car insurance is the difference between car insurance rates and car insurance premiums. A car insurance rate is what you can think of as the baseline for an insurance provider. This baseline is then modified based on your individual differences and the end result is your car insurance premium. So the more important question then becomes, how can one decrease his/her auto insurance premium?
Many factors can come into play here. To understand how these factors play into how much you’ll pay, you are going to have to think about things from the insurer’s point of view. Which things about you or your behavior might increase the risk to the insurance company? As you’ll soon find out, there are a multitude of components that go into determining this risk, some you can control and many you actually cannot.
What role does age or gender play?
Someone who has just started driving will definitely have to pay higher rates. Teenagers are much more likely to get into accidents due to lack of experience. Until you’ve aged a little and have a track record that proves you’re a safe driver, the premium will be high. If however, you do get into an accident and end up filing a claim, your premium will promptly be raised.
Even your gender can affect these premiums. If you’re a young man, all factors equal you’ll pay more than a young woman. But strangely enough, older men will pay less than older women (though this difference isn’t as much).
Your costs will go down if you’ve maintained a good credit score. Apparently good credit habits coincide with a lower probability of causing an accident.
How your car affects the price
The characteristics of your car has a major effect on your car insurance premium too. A car that is safer will obviously yield a lower cost. Some factors that can affect this safety include better traction, airbags, and car frames that are well designed for crashes. If your car is big and is considered relatively safe then you won’t have to pay as much because it will be less affected by a collision. If you have a newer more expensive model you’ll accordingly pay more since repairs will also be more expensive. On the other hand, if an old car gets totalled it might make more sense to just have it replaced instead of trying to get it repaired; therefore older cars will usually have less expensive car insurance.
Where you live will change your price
Your area of residence will also affect how much you pay (the more accidents occur in your area, the more you shell out). More claims will be filed in places with a higher population density, because the more people there are the more likely for accidents to happen. If the unemployment rates are high then less people will be able to afford car insurance which unfortunately translates to a higher premium for yourself.
As you might be able to tell, you can influence these factors to varying degrees. The most notable of which are how safe of a driver you are and what kind of car you drive. Of all the factors, one has the most control over these two. If you want to reduce your car insurance premium, being wary of collisions and choosing a safe, less expensive car can’t be overstated.