Are You Paying Too Much For Your Car Insurance?

Auto insurance is as important as it is mandatory in almost every state. You cannot drive legally in the US without liability insurance. Over 6 million passenger car accidents happen every year in the US, out of which millions of accidents result in serious damage to both the cars and even the people inside them. This is why the auto insurance market is booming, and more and more people are getting it. But when the demands are high, the prices go high as well. 

With so many options in the market, all with different types of coverage, it is very easy to fall prey to deceptive marketing tricks and sometimes inadequate information and end up paying too much for your car insurance. So are you paying too much for your car insurance? Let’s look at the different factors that may cause you to pay more than others. If any of these factors apply to you, then we’ll also add how to reduce the cost of insurance. 

Are deductibles Too Low? 

One of the most common reasons why people pay more in insurance premiums is because of deductibles. Deductibles are the amount that you get to set and usually, it is a percentage of your total insurance coverage. So if you have insurance coverage of $10,000, your deductible could be anywhere between $1,000 to $5,000, depending on your insurance company. 

A deductible is an amount you’ll have to pay before the insurance company pays the rest of it. For example, if the total cost of repairs is $8,000, and your deductible is $1,000, then you’ll have to pay a thousand bucks before the company pays the rest of the $7,000. 

The catch here is that the higher deductible you keep, the lower the insurance premium you’ll have to pay and vice versa. So if you keep your deductibles low, you’ll pay less from your pocket in case of an insurance claim, but will keep paying higher premiums. So keep the deductibles high if you want to pay less for insurance premiums. 

Locked with Same Insurance Provider

It is sometimes hard for people to believe that they can get affordable car insurance quotes instantly online with just one simple search. There are so many great websites where you can compare different auto insurance policies, their prices, and coverage details all in a single place. So if you are locked in with the same auto insurance provider, why stay in the same place when you can get better deals? 

Always be on the lookout for better auto insurance policies and whenever you find the better one, just make an easy switch. Just remember to first get the new policy before canceling your previous one. Having coverage gaps i.e., owning a car without an insurance policy can increase your insurance rates. 

Driving Record 

If you feel that you are paying more for your auto insurance than your friends or colleagues, perhaps it could be your driving record. Having a poor driving record is the biggest factor in increased insurance rates. If in the past seven years you’ve had any traffic violations, right from any parking ticket to a minor speeding ticket, you will see inflated insurance rates. 

If you have had a DUI charge, then you are looking at double or even quadruple insurance rates. Any sort of traffic violation or accident will increase the insurance rates, no matter which auto insurance company you choose.

You can request your CLUE report for free and see if any traffic violations could be the reason for increased insurance rates.

Parking Area

Where you keep your car parked has a big impact on the insurance rates. Your zip code can increase or decrease auto insurance rates.

All the insurance companies are risk management companies. Where the risk is high, the increase the costs to offset any potential insurance claims. This is why the area your car is parked decides the cost of insurance.

If your area has higher rates of crime, which includes theft, robbery, carjacking, accidents, etc, then be prepared to pay a lot more than someone keeping their car in a safe and sound place. 

If you want to change your parking location, inform your insurance company and see if there could be any reduction in the rates. Just don’t lie about where you keep your car to save some money as this comes under insurance fraud and can result in hefty fines and even some prison time.

Credit Score

Bet you did not expect to see credit score as a factor that increases your auto insurance rates. Almost every auto insurance company looks at your credit score when deciding premium prices. 

People with a bad credit score are more likely to miss insurance premium payments and hence they possess a higher risk to the company.

So to compensate for this risk, they are charged more for the insurance premiums. If you feel you’re paying more for insurance, then check your credit score. Maybe that could be one of the reasons.

Personal Factors

Some personal factors affect your auto insurance rates. The three most common factors under this category are age, gender, and type of car.

Age: People younger than 25 years of age pay more in auto insurance than people over that age. This is because of driving experience and statistics showing younger people get in road accidents more than older ones.

Gender: Statistically women are less likely to get in a road accident and hence are charged less compared to men.

Type of car: Expensive, imported cars cost more to repair compared to locally made ones. Hence, expensive cars require expensive auto insurance coverage.