Nobody wants to overpay for a service they're buying, let alone an insurance premium. Since so many different factors go into determining how agents calculate your rates, two people who might seem exactly the same can pay drastically different amounts.
Here are several factors that go into determining your auto insurance premiums:
Where you live affects how much you pay. People report more thefts, vandalism and accidents in highly populated areas. Uninsured drivers tend to flock to these areas as well, so many insurance companies have added uninsured motorist clauses to policies. These clauses can drive up rates even for people who have stellar driving records.
In addition to rates being dependent on your area's population rates, state laws also affect auto insurance premiums. Twelve states have no-fault insurance, which covers medical benefits and imposes monetary caps on the amount you can sue to recover after an auto accident. These features of no-fault insurance are handy for helping those involved in car accidents, but this type of insurance also allows fraud to run rampant, according to the Insurance Information Institute. This amount of fraud increases insurance rates to cover the losses incurred by the fraud.
According to the Centers for Disease Control and Prevention, drivers aged 16 to 19 have the highest risk of motor vehicle crashes, which drives up insurance rates. After 25, your rates may go down. Meanwhile, once you hit 70 years old, rates start to increase again due to the elderly's susceptibility to injury and medical complications.
The Insurance Institute for Highway Safety stated men are statistically more likely to die each year in a car crash. Men are riskier drivers than women and are more likely to drive drunk or speed, while women tend to buy safer cars that cost less to insure.
Your car's model and make
While these four factors might seem all-inclusive, they are largely beyond any one person's control. Whereas one of the most important variables in the insurance rate calculations is controllable, and that's the car you drive. Different cars require agents insure them at different prices. Cars that come with more safety features have lower rates, whereas cars that are hard to repair have higher premiums. You'll pay more for popular cars that criminals have a tendency to steal too.
As you can see, some factors involved in setting your auto insurance premium rates are, to some extent, quite beyond your control. It's unfortunate that these uncontrollable factors can determine your insurance premiums, that is, unless you're willing to move merely to lower your auto insurance premium.
But all is not lost though. Even if you're a 20-year-old male living in a densely populated area in a state with no-fault laws, by carefully selecting and purchasing a car that has a small engine, abundant safety features and a likelihood to not be stolen, you can easily reduce your insurance premium rates.
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