You are already familiar with shopping around to get the best insurance premium rate. But have you ever known that some factors can cause them to shoot up? Understanding auto insurance’s basic nature helps in understanding these reasons. Insurers gain when the insured have no accidents thereby not making claims. It’s therefore in their best interest to predict your risk dynamics as accurately as can be possible. The following factors mean an increased possibility that you will make a claim and cost the insurer money. To compensate for the increased possibility, they charge more by raising the premium. Here are top reasons that spike your auto insurance premium.
A New Vehicle
As assets, new cars are worth more and they cost more than older ones. In addition, leasing or buying a new car needs you to have full coverage at a specific level according to the requirements of some lenders. This makes strategizing or skimping on your required insurance coverage an impossibility, which then, in turn, raises your premium.
In addition to costing you in fuel and time, long commutes also increase your vehicle insurance premium. Again, the risk of getting into an accident is much higher if you will be driving during rush hours. Furthermore, if your profession requires frequent driving (like sales or pizza delivery), you will pay for extra time spent in the car as it increases the risk of being in an accident.
Although the ZIP code of where you live determines actual risk, statistics show residents of cities having more accidents. Furthermore, the more people that live in an area, the more claims that will be made, which is then reflected by higher premiums in such areas.
Age and Marital Status
You are considered to be in a higher risk category than a married parent if you aren’t married and have no children. You will even pay more as premium if you are 26 years old or younger, and if you are a male.
Ditching Your Auto Insurance
If you happen to dump your auto insurance policy or company in an attempt to save a little money, it’s then a case of being ‘penny wise and pound foolish’. Your premium shoots up astronomically when you lack any auto insurance, even if just for only a little over thirty days.
Your premium is lowered by not having any tickets or accidents, but as you’ve probably already imagined, having either or both raises your premium. When and if you get the spike is influenced by your insurance provider and locality. A ‘merit plan’ system is what insurance companies use for their risk level calculations. Most of them scan for latest traffic violations quite frequently, whether you are an old or new client. When your insurer learns of any violation you’ve committed, your rates or premium is then raised for some years to come.
Auto insurance premiums are frequently influenced by factors beyond your immediate control, including occupation, accidents, and age. Understanding the factors that make your car insurance rates shoot up helps you in shopping around for a provider with more competitive rates before you are given any surprise increase in rate. It could also make you rethink some of your present driving habits.