Monday, December 19, 2011

Factors that determine your Car Insurance Rates

New article on Newsday about car insurance rates.  It seems other than age, a driver's driving record with tickets and accidents is the best indicator of how high their premiums will be.

Factors that determine car insurance bill
By: Tim Cadet- Tribune Media Services

Calculating an insurance bill involves many factors and knowing what they are could help you avoid costly rates. Your age, driving record, where you live and the car that you drive are the biggest factors that determine your premium. Insurance companies predict the likelihood of you having an accident based on statistics they've collected over many years.  If your premiums seem high, the insurance company probably considers you to be someone more likely to be in an accident. It's crucial to shop around, as different insurance companies' premiums can vary widely.

Do you want coverage that only pays for repairs to damage that you've caused? Or do you want a policy that protects you from everything that may come your way, including court fees? The cost of insuring your car will depend on many factors:  Price quotes will vary: It's easy to say you want everything covered, but if you've been in an accident or two, or collected some speeding tickets, complete coverage may be expensive. Premiums will vary based on driving history and age, so don't be upset if your rate differs from someone you know.

Look for discounts: You can save money if you have a clean record, have no recent accidents, get good grades, buy a new car or serve in the military. These deals vary by provider so it will likely require extra research on your part. Don't worry; it could pay for itself.  Don't be shy: It's OK to ask the insurance representative a lot of questions. Some insurance agencies will cover custom repair parts and reimburse you for your rental car, roadside assistance and even injuries to your pet. Make sure you ask if these are available.

Insurance add-ons
If you are looking for a policy that's customized for you, many insurance providers offer coverage for specific needs. Insurance companies offer many different add-on packages, such as rental car reimbursement, roadside assistance and even coverage for when your car just plain dies. If you have only one car, you may want to consider a rental car reimbursement package. Remember, these kinds of packages will raise your premiums.

No-fault insurance
Some states have a no-fault auto-insurance law that is intended to lower premiums by preventing lawsuits between drivers. These states require personal-injury protection to cover bodily damages and lost wages, and these will raise your premiums.

States with no-fault insurance
Florida Hawaii Kansas Kentucky Massachusetts Michigan Minnesota New Jersey New York North Dakota Pennsylvania Utah

Source: Insurance Information Institute

How to save
Check for discounts: Driver discounts are available in various categories; for example, if you are safe driver or in the military, you may be eligible for a discount. If you have not been in an accident for a few years (the number of years can vary by insurer), you also may be eligible for a discount. If you take a defensive-driving class or become a member of a organization such as an alumni group, your provider may recognize you as someone who is less likely to have an accident.

Choose a higher deductible: The deductible is the amount of money you'll pay out of the total amount of repairs needed after an accident. A higher deductible will help lower your monthly rate, but remember, if you're in a crash, you may have to pay a large sum out of your own pocket down the road. A $1,000 deductable means your insurance company won't pay anything until repairs exceed $1,000. Choose a deducible that won't hurt your wallet, either now or in a crash. A lower deductible may be better for someone who doesn't drive often and has some money to spare.

Drive safer: Improve your driving habits, and you will find yourself saving cash. Driving less often, avoiding traffic violations and living in less-populated areas can help lower your premiums.

Look into one-stop shopping: Many insurance companies have policies for almost everything: cars, homes, motorcycles, boats, RVs, ATVs, even pets. Consider whether you want to add more vehicles or your home to your policy. You can usually save money by insuring multiple items through one provider.

Groups with lower premiums
Trends in driver behavior are used to help determine the likelihood of a policy holder having an accident. Over the years, certain vehicle and driver attributes have shown to be safer, leading to less harm being done to passengers.  Vehicle characteristics - New vehicle - Daytime running lights - Anti-theft system - Antilock brakes - Motorized seat belts Driver characteristics - Good student (meets grade-point average set by the provider) - College student who doesn't bring the car to school - Being married - Being over 25 - Living in a less-populated area - 55 years old and retired - 65 years old or older and drives only one-quarter of the vehicle's mileage - Owning a vehicle used only on a farm

Groups with higher premiums
The following vehicle and driver attributes are often associated with higher insurance rates:
Vehicle characteristics - Performance model (such as a Subaru WRX or Nissan 370Z) - Commonly stolen cars - Poor crash-test scores from the Insurance Institute for Highway Safety or the National Highway Traffic Safety Administration Driver characteristics - Young (16- to 19-year-old drivers are considered the highest risk) - Multiple tickets or traffic violations - Multiple accidents - Lives and works in a city - Many hours of driving per day


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