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Leading Factors in High Auto Premiums

The leading factors in high auto premiums each contribute in their own way to the prices we pay for insurance protection. Let's face it: most of us would rather not send money to our auto insurance providers each month; yet that's exactly what we have to do, with insurance laws making some form of coverage mandatory in nearly every state. While there is nothing you can do about the fact that you have to carry auto insurance if you want to be out on the roads, there is a lot you can do to keep down the price of coverage. A little background knowledge of the leading factors causing high rates can help you to become more diligent in your efforts to keep down the cost of coverage.

Claims History a Major Factor

While it is true in most respects that no accident or citation stays on your record forever, there is something to be said for the negative effects of a consistent pattern of these instances on your driving record. If your driving history is littered with accidents and major traffic offenses, it shows auto insurance companies that you have shown yourself time and again to represent a huge risk to insure.

Even just the presence of frequent tickets with no accidents is a problem in this regard. Demonstrating a pattern of choosing to drive above posted speeds, ignore traffic lights, etc, really paints a negative picture of your ability to safely navigate an automobile. For this reason, it is of the utmost importance for drivers to recognize their own need in these situations to make an honest effort to change their driving habits. If you have long been dogged by law enforcement officials and can no sooner get an infraction off your record than a new one takes it place, you need to think about the long-term financial effects of your driving habits.

Beyond mere personal safety and the safety of others, you have a lot at stake when it comes to making choices to adjust your driving in a way that better reflects the safe habits insurers are looking for. As mentioned above, accidents and tickets do not stay on your record forever, so you do have an opportunity to make a change in the way you approach the act of driving to positively impact future premiums. Slow down, drive with more caution and courtesy, and you will likely find that police officers are less interested in those side-of-the-road encounters. They'll be busy chasing the guy who drives the way you used to.

Premiums Influenced by Driver Characteristics

Whether you have been shown to be a safe driver or have had a habit of getting into some trouble behind the wheel, there are other characteristics helping to shape the rates you pay for auto coverage. For example, your age works against you while you are young, then in your favor for quite a few years. When you get older, it may start to work against you once more. There is nothing you can do about this-it's just something to be aware of and to try to counteract by keeping an eye out for a better deal.

Your gender is somewhat of a factor, but the influence of gender on auto rates may be overstated in a lot of places. Truthfully, men do pay more than women, but only to a point. After they reach the age of 25, there is really little to suggest that men pay more than women based on gender. Of more importance in most cases is your credit rating.

It may come to a surprise to a lot of drivers that missed payments on an installment loan from a few years back can affect your insurance prices today. But it's true. In some states, there have been efforts to remove credit-based insurance scoring through legislative means, but these efforts have only met with mixed success. This very type of battle is going on in Michigan as 2010 gets going. The state House passed a bill banning insurers from using credit-based scoring in their rate computations, but the Senate has yet to act, owing partially to pressure from the industry lobby.

Truthfully, without more direct access to observations of customers' driving habits, auto insurers are left with little choice but to use indirect means of risk assessment. Credit-based scoring is one of the means they have found effective, as controversial as it may be. For the time being, anyway, this method is still legal in many states. Therefore, it is very important for consumers to recognize the wide-spanning effects of their credit issues. Auto insurance premiums are only one of many areas that can be adversely affected by a negative credit report. To turn this into a positive, take care of your credit and watch your rates go down as a direct result.

Vehicles also Influence Policy Premiums

Admittedly, you only have so much control over the rates you pay for auto coverage. You can help keep your rates low by doing things like driving safely and staying accident-free and claim-free. You can look for discounts for group membership, safe driving, and other incentives you may qualify for. But another factor that has a very large bearing on the price you will end up paying for your auto coverage is your choice of vehicle. The car you drive (or the truck or SUV or crossover) is being insured against risk just as much as you are as a driver. Your choice of vehicle can have a profound impact on the policy premium you end up having to come up with for coverage.

In some ways, this is instinctive and obvious. If you insure a 20-year-old rust bucket pickup truck, it will clearly be less expensive than a brand-new diesel-powered four wheel drive straight from the showroom. This is partially because policy owners tend to carry more coverage on newer vehicles than they do older ones. That old bucket of rust probably only calls for liability coverage, while you certainly want to include comprehensive and collision on the new truck (particularly since these machines cost as much as some houses nowadays).

But in other ways, price differences and the reasoning behind them can be less clear to most of us. For example, one car on the dealer lot may cost you less than the one right next to it to insure, even if both vehicles have the same sticker price. Factors like performance in crash tests, standard-equipped safety and security features, and historical rate of theft all play into the rates we pay to insure our vehicles. While in some cases the differences may be clear, you should never take it for granted that you know the best way to insure a car or the most economical vehicle to choose for this purpose. With so many variables in play all at once, it can be difficult for any of us to keep track of all of them. Better to simply do your homework and gather multiple insurance quotes for any car you own, or any one you are interested in buying, to get a true sense of the market and avoid high auto insurance premiums.



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