There are a lot of elements that go into car insurance premiums. A calculation of a premium can actually be a complex equation. Drivers might not actually know about all of the factors that go into defining what rate a consumer will pay every month or every year for their car insurance. Knowing more about car insurance premiums can help drivers save money by fitting their policies to their needs.
Driver age and gender - The driver’s age, and even the gender, has a lot to do with insurance rates. That's because insurers use demographics to identify higher risk groups. This particularly affects teen drivers who end up paying sky-high rates.
Location - Every city and every town in America has a different scenario on its streets. Insurers also take this into account, and charge different rates depending on the location where the vehicle is primarily garaged.
Age of the car - The age of the car is a factor in the insurance rates, since it affects the value of the vehicle. In fact, a lot of the insurance rates are based on the total value estimate for the vehicle, including its age and mileage, size, and features included in the model design.
Safety features - Some drivers might not know it, but safety features can actually bring down the price of auto insurance. Insurers calculate deductions based on anti-lock brakes, airbags, and other features that could save costs in the event of a claim.
Deductible - Another prime factor that affects an insurance premium is a deductible. The deductible is the amount that a driver has to pay out of pocket before any insurer will start paying on the claim. The deductible must be paid by the driver on each claim that he or she files with the insurance company. Drivers can get lower premiums by raising the deductible, but in the case of a claim, they are on the hook to pay that money.
Mileage - Another factor in insurance rates is the amount of mileage that a driver will put on a vehicle each year. The risk goes up each additional mile that a car travels in any given time period. Insurers have even started offering what is known as pay as you drive insurance or PAYD to help American households save money on their insurance policies and only pay for the mileage that they use.
These are most of the basic considerations that affect a driver's auto insurance policy, and the amount that he or she is liable to pay for in premiums. Drivers can use these factors to change their auto insurance rates by talking directly to representatives and negotiating better policies that fit their specific situations. Knowing more about premiums can also help drivers make better decisions about how they drive and in staying safe on the road.