Insurance premiums are the amount you have to pay to an insurance company when you renew your policy. Most motor vehicle insurance companies have an insurance process that uses algorithms that analyze your details to determine your premiums. By understanding the factors affecting your premium rates, you stand a better chance of making informed decisions before you purchase that insurance.
1. The Type of Vehicle
The type of car you own impacts the premium rates that insurance companies will charge. For those who have classic cars and other unique vehicles, the insurer will likely charge higher rates. Additionally, the insurance process involves determining whether your type of car is prone to accidents. If it is, you will pay a higher rate.
2. Your Driving Patterns
The insurance firm has to analyze your previous insurance claims and whether you’ve received tickets. It also analyzes your accident history and whether you have personal insurance during the insurance process. Those with a tainted history are likely to pay higher car or motorcycle insurance premiums than those with a good track record.
3. Your Location
The insurance process analyzes your location to determine whether the places you frequently visit are prone to accidents, theft, or vandalism. The chances are high that insurance firms will charge higher premiums if your location is prone to such acts. Anti-theft features and your parking location will also affect insurance premiums.
4. Purpose of The Car
During the insurance assessment process, your insurance company determines whether you use the car for commercial or private purposes. The premiums will vary depending on the vehicle’s purpose, and the chances are good that you will pay higher rates for commercial vehicles than a private vehicle. Again, if the vehicle you are insuring, whether personal or commercial, is being used in high-risk situations, chances are your premiums will be higher.
5. Credit History
Your car insurance company may also refer to your credit history during the insurance process. They analyze your profile and determine your level of risk. A poor credit score might affect your insurance premium. However, with a good score, chances are you will pay lower premiums than defaulters.
6. Age of the Vehicle
Before you can be insured, the insurer will have to determine the insured declared value and your car’s depreciation. If you have a unique vehicle, the insurance assessor will have to determine the asset value resulting from wear and tear over a given duration. Old vehicles have higher depreciation. Hence, insurance companies will charge you higher premiums compared to newer vehicles.
7. Age and Driving Experience
Studies conducted in 2016 show that over 268 million vehicles had insurance coverage on U.S. roads. They also revealed that young males were more prone to accidents compared to females of similar age. The insurance process considers such demographics when determining your insurance premiums. Chances are high that young male drivers will pay higher premium rates compared to female drivers. However, most insurance companies adjust the premium rates once a driver reaches 25 years of age.
Several factors will determine your insurance premiums. It’s important to analyze different insurance providers’ policies before settling for one. When picking an insurance company, consider the availability of agents, customer service, and insurance policies.