Auto insurers underwrite policies to evaluate the risk given to each insurance applicant. During this process, a person is grouped into a category, such as a high-risk driver, low risk, teenage or elderly. If this risk associated with the applicant is considered too high, the application could be denied coverage altogether. After the results are calculated, the insurance carrier then gives a price, which is based on the perceived risk that driver poses.
1. This is also known as rating the driver
Insurers use this rating as a way to measure what it costs to insure a particular person if a claim is made and how likely claims would occur again in the future. This is often referred to as financial responsibility that an insurer takes on. The tip is to maintain a safe driving record and avoid traffic accidents and you will go a long ways towards getting cheaper car insurance.
2. Not all Insurance Companies Rate Drivers the Same
Many providers use the same general metrics but their algorithms that ultimately determine rates are quite distinct. One of the biggest factors that all insurers use in calculating premiums is the frequency of accidents. When a person files a claim, the insurance kicks in and accidents can cost many thousands of dollars, especially if there is a death involved. The more claims a person files, the riskier he or she is in the eyes of the carrier and more likely to file a future claim. Thus, higher rates are imposed on these at-risk motorist. To keep rates low, avoid incidents and filing claims and you will save a lot of money on auto insurance. If you have had accidents in the past don’t worry.
3. Main Contributing Factors that Affect Auto Insurance Rates
*Driving Record: Auto Insurers will take a close look at how many citations and accidents you have been involved in.
Keep up a good driving record and watch your rates go down.
*The Location you live: If you live in the city, you can expect to pay more than if you live in a rural location with much less traffic.
* The Car you Drive: This is a very large factor that makes up rates. New and expensive luxury or sports cars have some of the highest insurance rates. On the other hand, used cars that are safe and cheap to repair have some of the lowest coverage costs. Get a boring used car and save on coverage.
* Marriage Status: Married people pay less for car ins because they are considered more responsible.
* Your Age: Drivers that are under 25 can expect to pay about double for auto ins. The sweet sport for the lowest rates is between 32 and 62 years of age.
4. Apply for all the Discounts you can
A great and smart way to save on vehicle insurance is to apply for several discounts. If you have more than one automobile, consider getting a bundled or multi-vehicle discount. You can also take a safe driver course and save about 5%. Other popular discounts are good student, military, and even teacher.
5. Shop Direct on the Web for the Cheapest Rates
The internet has literally taken over the world. It has also saved millions of people money on car insurance. Buying car insurance online is smart because you can find direct rate pricing that most brokers can’t match.
Source by Mike Heuer