10 Things That Affect the Price of Car Insurance Premiums

It's that time of the year again; you have to renew your insurance policy. While some may stick with their usual insurer, many drivers have been forced to consider other options. The reason? A significant rise in inflation, which has led to a substantial increase in the cost of insuring a car.

If you've got your renewal premium and are unsure why it's so high, you're probably wondering what's causing it so you can explore other options. In this article, we've listed some things that affect the price of car insurance premiums to help you out.

Your Age

Whether you like it or not, insurance companies will consider your age when you're looking to insure your vehicle. They see someone older as less likely to have an accident than someone younger because the older person will have more experience behind the wheel.

We've all been young once, and let's be honest, when you're driving at first, you have that arrogance about you that you're cool and want to show off. While not all young people are like this, insurers only try to cover themselves; it's nothing personal.

It's not all bad news, though, for youngsters; companies like USAA are known for their affordable car insurance rates for young people.

Driving Record

One of the key factors car insurance companies consider is if you've had an accident in the past. 

It's a primary indicator of how much of a risk you are to them because if you've crashed in the past, you're more likely to do it again than someone who hasn't.

Accidents aren't the only things they'll look at, though; they'll also check to see if you've had any driving tickets or DUIs over the past couple of years. Again, these are more examples of acting recklessly on the roads, making them more likely to pay out for a driver's mistakes.

The Number of Year's Experience You Have

Car insurers value experience; they see someone who has been behind the wheel for some time far less likely to act erratically on the road than someone starting out. Sure, it happens from time to time, but most drivers are less of a liability who have been driving for a good chunk of their lives.

Remember, age and driving experience are different, so if you say 40 years old but only starting out driving, you'll still be viewed as more of a risk. On the other hand, an insurer will view a 25-year-old with six years of experience more favorably.

Gender

Believe it or not, gender is a big pricing factor for insurers. Men are known to pay more for insurance than women because they tend to put themselves in riskier situations, which insurers don't like. 

It's important to note that as men and women get older, these factors become less important to insurers. They tend to focus on things like past driving experience and the driver's accident record, but for younger people, they'll take it into account.

History of Insurance

Gaps in your insurance history can be a red flag to insurers. They could indicate that you're more inclined to miss some of the payments, which ultimately shows you're an unreliable customer. A gap is also a big sign that you've been driving uninsured for some period, a major indicator of silly behavior on the road that can put yourself and other drivers at risk.

Your Mileage per Year

The more time you spend on the road, the greater your risk of having an accident. While this has nothing to do with your driving skills, it's more of a calculated risk assessment insurers will take when determining premiums for drivers.

Your Credit Score

Insurers use credit scores to determine how likely you are to have an accident down the line. They take the information from your credit report, estimate based on that, and then use the results to determine how much your premium will be for the upcoming year.

Anyone with a bad credit score, which is usually seen at anything below 850, is more likely to see a higher insurance premium than someone with a credit score over 850. That's why behaving on the roads at all times is necessary folks!

Past Claims

If you've claimed from an accident in the past, then you're more likely to do it in the future. This is the same if someone has claimed against you and successfully received compensation.

Unfortunately, you might have had an accident through no fault of your own and had to claim; insurers will still factor this in because they need to make money at the end of the day. However, if you claim history is clean as a whistle, you don't have anything to worry about because you're considered less risky.

The Type of Vehicle You Own

When you buy a brand new vehicle, this comes with a higher insurance premium because it will cost an insurance company more money in compensation for damages than it would for something that's been on the road for decades.

Say you just bought a brand new Tesla; that's going to be a much bigger financial burden for an insurer than a cheap little Honda Fit.

What Coverage You're Seeking

Companies normally offer insurance coverage in various packages like third party, fire, and theft, and fully comprehensive. The less coverage you're after, the cheaper your premium will be. But remember, if something happens unexpectedly, you could end up with a hefty bill at the end of it if you're not fully covered, so make a wise decision.

That's What Affects the Price of Car Insurance Premiums!

You can see that there are a lot of factors that affect the price of insurance premiums. Everyone's situation is different; some drivers will have to pay more than others; it's just how it is. But as long as you drive responsibility throughout your life and do the right things, you'll be awarded cheaper insurance when you're older.