It’s happened to you or someone you know: you get your auto insurance renewal papers in the mail and notice that your premiums have skyrocketed. Chances are that it has made you angry, but you shrug your shoulders and pay it anyway. After all, we all need auto insurance. You may be interested to know what it is that can make your car insurance premiums increase by leaps and bounds. Here are five factors that affect your auto insurance premiums that you may not have been aware of:
1. Where You Live
Have you ever noticed that, when you are shopping for auto insurance, that you have to enter your zip code? Many people mistakenly think that this is so they can be put in contact with an agent in their area. Actually, it’s because where you live will have a significant impact on your premiums.
If you live, for instance, in the center of Cleveland, you’ll pay more than the person who lives in a rural area of Kansas. Those people that live in urban areas are more likely to be involved in motor vehicle accidents or have their cars stolen, thus increasing their insurance rates.
2. Vehicle Year
People often think that when they get a new car, insurance will be cheaper because the chance of repairs is less likely. This isn’t how insurance works. When you buy a new car, the minute you drive it off of the lot, its value plummets. This means that if you get into an accident, you will owe far more than the car is worth. Because of this disparity in values, your insurance premiums will be higher for a new car than they will be for an older model.
Most people understand that a sports car will cost them dearly when it comes to insurance premiums. What most people don’t know, however, is that large SUVs and trucks will cost them as well. But why is this the case? Because if you get into an accident, you will cause much more damage to the other vehicle, in your SUV, than you would if you were driving a small sedan.
What in the world does your occupation have to do with your car insurance? Quite a lot, actually! If you deliver newspapers or pizzas full-time, or even part-time, you’ll pay higher premiums than the guy next door who works in an office all day. This is because, as a delivery driver, your chances of being in a car accident are increased dramatically. Who knew that your occupation could have such an effect on your insurance rates?
We all know that student drivers can get discounts on their premiums for good grades, but did you know that the higher level of education you have, the lower your premiums? If you have a high school education, you will pay significantly more than someone who has earned a bachelor’s degree. Likewise, if you have an associate’s degree, you will be paying more than someone who has earned a higher degree. It’s a great incentive to go back to school, isn’t it?
It’s easy to find ways to lower your car insurance, but not so easy to understand the factors that make car insurance premiums rise. By understanding exactly what these factors are, you may be able to lower your insurance premiums more than you previously thought possible. Contact your insurance agent and ask what factors are affecting your premiums; you might be surprised.
Author Sandy Landsford is an accountant and blogs for www.carinsurance.org.uk, where you can get a quote for cheap car insurance!