Sometimes, when people’s lifestyle or location changes, they are surprised to find out that their insurance rates change, too. This is true with car insurance since insurance companies use many factors to price auto insurance policies correctly. Knowing what some of these factors are and why they matter to insurers can help you better understand rate changes, if they do occur.
Below are a few things – among others – that can cause an auto insurance policy to rise or fall in price.
Not surprisingly, different types of cars cost different amounts to insure. A vehicle with more safety features than others will often result in fewer and less severe physical injury claims and, therefore, require less medical care. These features might also mean that the drivers of such vehicles have fewer accidents because of the safety features. If you are thinking of getting a new vehicle, it’s helpful to call your trusted advisor at Tompkins Insurance Agencies first to find out how your car model will impact your current premium rate.
Change of Location
Even if you just move to a new house or apartment a block away, you will need to let your insurer know that your address has changed – and you may see a jump or fall in your premiums. Zip codes are one factor insurance companies use to set rates. The claims within each zip code might vary and have a different number of auto accidents, thefts, vandalism, fraud, or other issues impacting claims. If the chance of filing a claim increases in your new area, so might your auto insurance premium.
New Driver Added to the Policy
Adding someone to your auto insurance policy will also affect the rates. If the new person on the policy is a teen driver, some parents are surprised to see their monthly premiums increase. This is because teens in their first six months of driving independently have more crashes than in their next year of driving. As teens gain experience, they typically have fewer accidents. Still, teenagers are an expensive group of drivers to insure, so premiums often increase if you add your child to your policy.
Young drivers will pay more for auto insurance, as they have less driving experience and are more likely to get into accidents. Meanwhile, old drivers are also charged more for car insurance, as they have an increased risk of being injured in an accident or collision because of certain age-related conditions that might affect their motor skills.
Traffic violations such as improper passing and backing, following too close, speeding, careless driving, drag racing, and driving with a suspended license or under the influence can result in higher premiums. Drivers who have been in multiple accidents need to pay more for their car insurance than someone with a clean driving record.
If you are purchasing auto insurance for the vehicle you use daily, your premiums will be higher, as it is more prone to accidents and collisions than a vehicle used on weekends or during vacations.
The Coverage Type You Choose
You will need to pay more if you require more coverage than what a standard car insurance policy provides or your state requires. This includes add-ons like new car replacement coverage, sound system coverage, towing and labor cost, and rental reimbursement. It is good to review your policy every year to drop any unnecessary rider that might increase your auto insurance costs.