Considerations when getting car insurance

Car Insurance Considerations

Car insurance is essential for all drivers. It protects you from accidents and injuries and helps pay for damage to your car. Car insurance companies consider a variety of factors when deciding on your premiums. They include things like your age, where you live, your driving record, your credit, and your car. At a high level, the factors are weighed by insurance companies, who devise risk profiles that are scored based on the car, the driver or owner and the intended uses of the car.

Vehicle Factors

What car factors influence insurance premiums?

In general, the more expensive the car and the longer you’ve been driving, the more you’ll pay for car insurance. A few other vehicle related factors that determine your insurance premium are the make and model of the car, year of production, the size of the engine, fuel efficiency, number of seats, along with safety equipment and other vehicle features or configurations.

Insurers will model risk profiles based on the vehicle and the different drivers to see if there is correlation of higher probability of claims arising based on of the vehicle itself when compared to other vehicles driven by similar drivers. Furthermore, the vehicle can be compared to other cars in its category or of the same make, and be deemed as a higher risk and thus come with a higher premium to insure. Sport cars are an example of a vehicle category that is usually classified as high risk, especially when driver’s are inexperienced.

  • Cars with good safety features often come with reductions or lower premiums.
  • Older model cars will generally be cheaper than a newer model car.
  • The more features your car has, the more expensive your insurance will be. Cars with many high-tech features, like satellite radio and GPS, are more expensive to insure.
  • If you have comprehensive and collision coverage or if you are financing the car, the type of car you drive will also affect the cost of your insurance. Cars that cost more to repair are generally more expensive to insure. Luxury cars generally have higher insurance premiums than economy models.

Driver Factors

What are high-risk drivers?

Car insurance companies charge high-risk drivers more for coverage because they’re considered more likely to get in accidents or have issues with their vehicles. If you have one or more of the following things in your record, you’re probably considered high risk and will pay more for car insurance:

  • Speeding tickets
  • DUI or DWI
  • Accidents
  • Towing charges
  • Driving without insurance

If you have an accident or a traffic ticket, talk to your insurer. They may be willing to reduce your rate if you don’t have any more violations.

Do young drivers have higher premiums?

Most car insurance companies have a minimum age requirement for drivers. The minimum age may be anywhere from 16 to 25 years old.

In general, the younger you are, the more expensive it is to insure a car. This is because younger drivers are more likely to be involved in accidents or have traffic violations.

As a young driver, you can reduce the cost of your car insurance by:

  • getting a driver’s licence
  • taking a defensive driving course
  • buying a car that falls within your budget
  • reducing your excess
  • ensuring you have a good credit rating

Is there a gender gap with car insurance premiums for men versus women?

Yes, there’s a gender gap when it comes to car insurance. The price gap between men and women’s car insurance is more than $300. And the gap is even greater for high-risk drivers.

Men tend to have more accidents, speeding tickets, and DUIs than women, which is why they pay more for car insurance.

In the past, the gender gap was even bigger. It’s been closing over the years, and it’s gradually gotten smaller. Younger drivers have seen the biggest difference in rates between men and women.

Will my place of residence affect my car insurance premium?

Where you live can also have a significant impact on the cost of your car insurance. If you live in a large city, you will pay more than someone who lives in a rural area. If you have a lot of traffic in your area, you may have higher premiums.

What other personal factors affect car insurance premiums?

  • Age – younger drivers typically pay higher premiums.
  • Income – your level of income will likely impact your premium. Lower income drivers may be asked to pay higher premiums when compared to higher income drivers.
  • Employment status – employment status may affect insurance premiums or coverage. Drivers in employment may have lower fees, and on a related note, drivers with longer employment history will likely be offered lower premiums.
  • Claims history – drivers with previous insurance claim history, for any type of insurance, will most likely need to pay higher premiums for car insurance.
  • Driving record – individuals with adverse driving history such as speeding tickets, accidents or other minor or major traffic or criminal events on their driving record will likely pay higher premiums. Conversely, drivers with a clean driving record will usually pay lower insurance premiums.
  • Years of driving experience – driving experience directly affects insurance premiums. Drivers with more driving experience will have lower costs of insurance over time when compared to inexperienced drivers.

The cost of car insurance depends on a number of factors. If you want to save money, it’s a good idea to compare quotes from a variety of insurers. You should also consider raising your deductible.

Usage Factors

Does the amount of mileage I drive impact my car insurance?

Yes, mileage usually impacts insurance premiums and coverage availability. Individuals who aim to drive more miles will likely need to pay higher premiums if they wish to remain within the terms of the insurance agreements. Some insurers may offer ‘unlimited’ mileage yet these will usually be capped to a certain degree to reduce the insurers risk.

Are cars that are used for business purposes charged a higher car insurance premium?

Vehicles that are used for business purposes may vary in premiums compared to those that used purely for business purposes. Many insurers require policy holders or drivers to disclose the purposes of their journeys when using the vehicle. If a driver is intending to use a vehicle for construction purposes, the premiums would likely be higher when compared to someone who is using their car for business purposes just to commute to office buildings.

What can I do to find the best car insurance for my needs?

If you’ve looked around for insurance products and haven’t found anything that’s suitable for your needs or seems like good value, consider reaching out to an insurance broker who has access to a number of specialist insurers in the market. They would be able to advise and provide insight into options that would be a better fit. These brokers may should not charge a fee, as they are usually compensated by the insurer or underwriter who they are referring you to.

Wrap up

Finding the right car insurance can be a headache. However, spending the time and doing it diligently ensures you’ll be less likely to spend time switching providers as you’ll hopefully find an insurer that provides sufficient coverage at an agreeable premium.