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Car insurance protects you if you are involved in a vehicular accident. With insurance, you can have property damage and bodily injuries covered. But how are car insurance rates determined?
To find out, keep reading.
What Is Car Insurance?
Car insurance is a contract between you and an insurance company. The contract protects you from financial loss in the event of an accident or theft. In exchange for this coverage, you pay the insurer premiums every month, semi-annually, or annually.
How Are Car Insurance Rates Determined?
Car insurance rates vary depending on the circumstances of the person applying for coverage. Here are some factors that may affect your car insurance rates.
State requirements
The state where you live will heavily impact how much you pay for coverage. Premiums for state-minimum coverage vary by up to 320% because each state has its own laws about car insurance. There are different minimum requirements from state to state, so the more you’re required to buy the more expensive your policy will be.
Age
Younger drivers are known to be less safe on the road. This is why rates vary up to 370% based on age. Younger drivers pay more, while more experienced drivers pay less. Usually, insurance rates drop when you hit age 25, but they could decrease when you are younger if you have a good driving history.
Car make and model
The type of car you have is very important when deciding insurance costs. Some vehicles are cheaper to insure than others, so there is some variance here. In fact, insurance companies prefer to insure vehicles that are considered “safe”. If you have a safer vehicle, you will be offered lower rates on coverage.
High-risk violations
Traffic violations and car accidents can increase the cost of your car insurance coverage. If you are known to be an unsafe driver, insurance companies will assess you at a higher risk level. High-risk customers need to pay more because it is more likely that they will make a claim with the insurance company.
Yearly mileage
Mileage is a factor that can affect car insurance prices. If you are on the road more, you are more likely to be in an accident. As a result, the insurers will charge more if you usually have a long commute to work or school.
Credit score
If you have a poor credit score, you may be required to pay up to 71% more than drivers with good credit. Fortunately, some states don’t allow insurance companies to take credit scores into account when determining car insurance rates.
Get Qualifying Car Insurance
The insurance plan you choose will also impact how much you pay for coverage. To find an affordable plan that offers all of the benefits you need, get in touch with an insurance specialist. The experienced agents at Insured For Life can help you get started with a free quote.
To schedule a call, reach out to us at 1-888-989-0079.
