Factors that affect car insurance premium in the USA

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When you shop for car insurance policies, it is common to look for ways to reduce the premium cost by lowering coverage or raising deductibles. However, you may not know that many factors affect the car insurance premium. For example, while points on the driving license may increase the premium, but a speeding warning and car insurance have no connection whatsoever. Here is a list of the top five factors that affect the car insurance premium.

1. Demography

The first thing insurance company look for is the demography of the policy buyer. Your age, gender, marital status, geographic location, and credit score play a vital role in deciding the premium cost. It is believed that older men have better driving skills than male teenagers, and older women are more likely to have more accidents than older men. Similarly, single drivers indulge more in risky driving in comparison to married drivers. If the area you live in is more prone to accidents, it will significantly affect the premium cost. The premium will be higher if there is a direct link between the risk of accidents and the profession.

2. Safety rating

A vehicle with a higher safety rating means that you will need to pay lesser for the medical bills; thus, the premium will be lower. The safety rating depends on the car’s model, safety features like airbags, traction control, and seat belts, and the driver’s driving record.

3. Age of the Car

As per the studies, older cars are more likely to be severely damaged in an accident than in new cars, which means the cost of repairs will be significantly higher in an older car. Most of the customers prefer to discard the old car instead of paying for the repairs. However, in the case of a new car, chances are you would prefer to get the car repaired instead of replacing it. In that case, collision cover is the best bet, but it will increase your premium cost. However, if you own an older can you can reduce the premium be opting out of collision cover and prefer to replace it in case of severe damage.

4. Personal driving habits

While deciding on the premium, the car insurance companies will check your driving habits. If your driving record shows higher points on the license, the insurance company will charge you a higher premium because higher points mean reckless driving. The points on driving license increase every time you get a ticket or meet an accident. If you have made insurance claims in the past, it will also appear in the record.

5. Driving activity

Some insurance companies consider how much you drive every year. Business commuters are more likely to add miles to their car, which means the chances of being in an accident are higher. Also, the chances of wear and tear are higher. Thus if the driving activity is higher, the premium will be higher as well.

Final Words

Several reasons can affect the premium cost. The best way to reduce the premium cost is to compare insurance policies and indulge in good driving practices. Make sure to choose add-ons and deductibles wisely to ensure proper coverage.