Factors that cause auto insurance premiums to rise

Factors that cause auto insurance premiums to rise

October 13, 2016
cause auto insurance premiums to rise
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Most Americans know that, if you want to save money on auto insurance, you have to shop around and visit as many insurers as possible. But there’s something else that many people don’t know. Certain factors can also cause auto insurance premiums to rise.

The basic nature of auto insurance

To understand what things affect auto insurance, you need to first understand how it works. Insurance companies make money when they insure drivers who don’t have accidents, and don’t make claims. If the opposite happens, and the insured get into accidents, then the insurer loses money.

That’s why insurance companies are so interested in predicting driver risk factors as accurately as possible. The presence of these factors will alert insurers and let them know that they are likely to lose a lot of money if the policyholder files a claim. As a result, in order to compensate for the increased likelihood of a huge payout, they raise premiums.

Factors that cause auto insurance premiums to rise

The following factors cause auto insurance premiums to rise:

Buying a new car

It goes without saying that a new car usually costs more money than an older model. So it will also cost more to replace. If you want to save some money, you have to do some research before buying a new car, and see what types of cars are considered safer by insurers. These carse, although new, will cost less to insure.

Increasing your commute

The more time you spend behind the wheel, the more likely it is that you will be involved in an accident. That’s why long commutes won’t just cost you in time and money. They’ll also affect your premiums. You may spend less if you take a train or a bus to work.

Breaking the law

Insures love drivers with spotless records. That’s why people with no accidents and no tickets usually get lower premiums. But if you aren’t one of them, you should expect your premiums to rise. But things aren’t all bad. Tickets and accidents don’t stay on your record forever. If you become a better and safer driver, your insurer will reward you with a discount.

Age and marital status

People who are not married and who don’t have children are considered a higher risk than those who are married and have kids. Also, males who are 26 or younger will pay even more.

The zip code you live in

If the residents of a certain zip code tend to get involved in a lot of accidents, then you moving there will definitely cause your premiums to rise.

Getting rid of your auto insurance

Paying for your auto insurance each month can affect your finances. But if you cancel your auto insurance just to save some money, you’ll end up having to pay even more next time you get auto insurance.


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