Factors that Determine Auto Insurance Premiums

You may have wondered why you are paying rates substantially higher for car insurance than your friend or neighbor. While the average premium paid by drivers in the U.S.is $1,566 per year, there are many factors that can determine the amount you will pay to insure your vehicle. No two people will pay the same amount for their car insurance, as many different factors play a role in the amount.

Your driving record is one of the most important factors that determines your auto insurance premium. Those with a clean record free of any speeding tickets, accidents, or other driving infractions will pay a mush lower premium than those who have infractions on their record. With just one infraction on your record, you could see increases of as much as 40% on your car insurance. Obey all traffic laws and pay attention while you are on the road and you will see the rewards in your car insurance payments.

The car insurance company you choose factors in on your rates as well. Auto insurance is a highly competitive industry, and rates can greatly vary between companies. It is always a good idea to get quotes from three or more companies before deciding which company to go with.

Some auto insurance companies may also use your credit score to determine your rates. Get a copy of your credit report and ensure that it is free of errors so that you are not overpaying for car insurance. If you do find errors, correct them as soon as possible. Keep your credit score as high as possible by paying your bills on time and reducing the debt that you have.

What type of vehicle are you driving? The type of vehicle you drive is a major factor in your auto insurance rates. If you drive a high theft car, such as a Cadillac Escalade or Honda Accord, rates will almost double. You will also see higher rates if you drive a sports or luxury car, or a car with a larger motor. If you do drive one of the high theft vehicles, adding anti-theft devices can knock a good percentage from your rates. Anti-theft devices include steering wheel locks and alarm systems.

If you are under the age of 25, you will pay more for auto insurance as well. Considered high-risk drivers, rates for this age group are significantly higher than those 25 and older. Your gender may also determine your rates, with auto insurance industry reporting males pay more for auto insurance than females. Of course, the city and state that you live in will play a role in your premium as well.