Factors That Influence Auto Insurance Premiums

12 July 2022 by Elijah Steward

Every vehicle must have an auto insurance policy. This is the money people pay to the insurance company when purchasing a new car or renewing their insurance policy. However, these premiums are personalized to determine each person's risk. It implies that the insurance company will analyze various factors to determine who will likely file an insurance claim. Ultimately, these people may pay higher auto insurance premiums than those with a lower risk. However, each insurance company assesses these risk factors differently since each company has different rates and regulations. Here are various factors that influence auto insurance premiums. 

Your Driving Record

Your driving record may haunt you when applying for auto insurance premiums. Insurance companies collect data on the number of traffic violations you have caused. Furthermore, they will assess your at-fault accidents and check your driver's license points. All these factors demonstrate your risk. For instance, if you have caused many accidents in the past year, they may assume you are a high-risk individual. Thus, you will pay high auto insurance premiums because you have a high probability of causing an accident and claiming your auto insurance policy. Your driving history will determine if you are a risky driver or not. 

Your Coverage Choices

The number of things you want to be covered on your policy will determine your auto insurance premiums. You will pay high premiums if you have many coverage selections. For instance, if you select the liability car insurance and the medical expense coverage, your insurance premiums will rise. This is because insurance companies classify these selections differently. For example, liability car insurance covers the damages and injuries incurred if you cause an accident. In contrast, medical expense coverage covers your medical expenses and other liabilities, such as loss of wages. The higher the coverage selections on one's policy, the higher the auto insurance premiums. 

Your Vehicle's Model and Valuation

The type of vehicle you drive will determine your auto insurance premiums. Those driving expensive cars will pay higher insurance premiums than those with cheap cars. Insurance companies argue that it will cost them more money to repair or replace an expensive car than a cheap car. Furthermore, you will pay high insurance premiums if you drive sports cars. The insurance companies classify these cars as high-risk vehicles because they are likely to cause accidents due to their high speeds. Additionally, you will pay low premiums if your car has various safety features, such as safety airbags. The vehicle you drive is a key determining of your auto insurance premiums. 

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