Insurance Auto Insurance & Registration

Things That ACTUALLY Impact Your Car Insurance Rates

Many of you, even if just for a split second, have pondered the age-old question, "If I get a red car, is that going to be more expensive to insure?" You then come to your senses, and realize how silly a question this is.
There are dozens of factors that actuaries - the mathematicians who determine what your rate will be at a given time - leverage to make sure each and every car insurance premium is as close to perfect as possible.
Color is simply not one of them.
Over the next few paragraphs, I will review some of the heaviest hitters that impact how much you pay your car insurance carrier every month (or whatever your preferred frequency is).
Let's start with the vehicle itself.
Insurance companies typically have a symbol, or some other rating system, to determine how much it would cost to insure (and replace in the event of a total loss) this vehicle, relative to other cars.
It's no surprise that the parts for a Honda are less expensive, and easier to find, than a Ferrari, for example.
The sum of the aforementioned parts, so to speak, will determine the price of the vehicle, which determines how much the vehicle needs to be insured for, and there you have one of the primary factors in defining your car insurance rates.
Taking a moment to delve into one specific part, you'll see another major rating factor, and that is the engine block.
The more power you have, the more damage you can do, the more expensive the car will be.
You'll notice a significant difference when insuring a 1.
8L I-4 (read that as "one point eight liter I four" - a 4 cylinder engine with a 1.
8L engine displacement), and a 4.
4L V8.
It's a nice side note that the smaller engines are also a lot more fuel efficient.
This means you'll save on your premiums AND on your fuel bill.
Nothing wrong with that, I'm sure.
Moving away from the car, the drivers on the policy are a key rating factor.
A 17 year old with a brand new BMW 7-series will be several orders of magnitude in premium above a 40 year old in a Toyota Corolla from a prior model year.
Tickets, accidents, suspensions, DUIs, and so forth will also impact what you pay.
Using one example, you will be assessed one point for most tickets, one point if you are at fault in an accident that causes more than $1000 in damage, and two points if you injure someone in an accident.
If you have two points on your license, you lose the discount that may be available to you known as the Good Driver Discount, which can be as much as 20% off your premium.
Your record will be impacted for three years from the conviction date, accident date, or date your license status moved from suspended to valid.
A commonly overlooked driving habit is your annual miles.
Did you know that, if you don't specify, chances are great your premium reflects someone who drives 10,000 miles a year? Have an honest conversation with your broker about how far you are from work, what kind of road trips you do or do not take every year, how often and far you have to drive to the store, and so on.
Every mile counts.
Now that you have one neatly packaged bundle of ways your car insurance rate is calculated, time to drop that off where you live.
Yes, your zip code is the final major consideration for how much you will pay.
If you walk down your street, and see a handful of high-end vehicles, or can't go more than a day without seeing another accident nearby, you can bet your rate will be a little higher than even a neighboring zip code with more modest vehicles and less accidents (and yes, a mere move across the street, if you cross a zip code border, CAN impact your rates).
The purpose of this article is to help increase your awareness of why you pay what you pay, and also to help you project the possible impact that a move, a shiny new vehicle, or that speeding ticket may have.
My final recommendation, again, is that you have honest, open, detailed conversations with your broker or agent, and take a greater level of care with your car insurance than you may have before you read this article.


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