Buying a new car is the exciting part. Yehey!
What comes after typically is not as exciting. It is insurance time. You want to find the balance between coverage and payments and that is not always easy.
Typically the lower amount of coverage you have, the less money you have to pay.
You can also raise your deductible which will lower your monthly payments. But did you know there are a lot of other factors that affect what your insurance rates will be?
Simple Things That Can Affect Your Auto Insurance
Here are some of the things that will influence how much you pay for auto insurance.
Your Age and Gender
Whether you realized it or not, your gender and age will affect your rates. Although the difference isn’t significant, it is still there.
The reasoning behind this is that a young male, according to statistics, is more likely to be in an accident compared to a young female. So if you are male and a teenager to young adult, be prepared for higher rates.
But on the other side, an older woman tends to pay a bit more in insurance compared to an older male.
Where You Live
Insurance company’s factor in where you live to determine your insurance rates.
If you are in densely populated areas, for the insurer, you are more prone to accidents, injuries, and theft.
Because of that, your insurance premiums will be higher than someone in a less populated area.
The Type of Car You Drive
What you drive affects your insurance rates.
If you own a car that is highly sought after and vulnerable to theft, your likely to have high insurance rates compared to a vehicle not typically targeted.
The safety rating of your vehicle plays a role. The higher the safety rating, the less likely there will be bodily harm if you are in an accident.
On the other hand, the lower safety rating your vehicle has, the more likely there will be injuries in a crash.
So factor in insurance when you are buying a new vehicle.
The type of car will significantly influence your insurance premiums. Although electric cars are better on the environment and save you on gas, factors like insurance can make electric cars more expensive.
Your driving records are taken into consideration when you get auto insurance.
If you tend to make multiple claims, are in accidents quite frequently and are continually getting tickets, your record will show the insurer you’re more likely to cost them money.
The result, higher insurance premiums to cover the cost. But if you can clean up your driving record over time, it will help lower your rates later on.
What you use your vehicle for is also a factor. If you travel a lot for business, you are more likely to get in an accident compared to someone who doesn’t drive as often. So expect to have higher premiums to cover for that.
So when you are going in for auto insurance, be prepared for factors that you may not have thought about.
Insurance is a major part of owning a car. The more you can do to keep your rates low, the better it will be on your wallet.
Has this post changed the way you think about auto insurance and how different factors play in gauging how much you pay?
Allan Liwanag is a personal finance blogger who paid off at least $40K debt in 3 years by adopting simple and extreme saving techniques while ensuring his family’s needs were taken care of. An analyst by day and dedicated blogger by night, he loves to share his thoughts – based on his research, personal knowledge, and experience – on topics related to family, life, and money. Allan lives with his family in Maryland, USA.