As a rule, car owners generally try to get good insurance coverage for their vehicles. They also prefer to pay as little as possible to their insurance company. Comparison shopping auto insurance has become the norm (online tools only make this easier these days). Understanding why insurance companies increase their rates will definitely help car owners save money.
Auto insurance rates depend on a variety of factors. Car owners with good credit scores generally get insurance at lower rates. Car owners living in urban areas are generally charged more, simply because the typically higher crime rates in cities result in higher insurance rates. Auto insurance companies increase rates if they find any gap in past coverage.
If the insurance company finds out that the policy owner was at fault in an accident, it will increase the premium amount. Driving violations result in a rate increase. Adding a young (16 – 25 years) or old (more than 65 years) driver is another factor which can increase the premium amount. Insurance rates are generally lower for eco-friendly vehicles. Insurance companies charge lower rages for educated car owners.
If the policy owner makes a claim, insurance company increases the premium amount. If you have a small accident and need repairs that won’t cost much, it is in your best financial interest to avoid making a claim. Getting caught while driving under the influence of alcohol or drugs will absolutely increase your insurance rates. Male drivers are generally charged more than women, because more accidents are caused by men than by women. Men are considered higher-risk individuals.
Compact cars and sedans have lower rates. Insurance rates are higher for SUVs and sports cars. Some car owners love to modify their cars in order to enhance the performance, but these modifications may result in higher insurance payments. “Distance traveled per year” is another factor that is considered while determining the premium amount. Rates also depend on the condition of the car. Insurance companies generally offer discounts if they find that the car owner holds another policy (such as life insurance) with them.
Car owners can get the best deal if they keep the above-mentioned facts in mind while dealing with auto insurance companies. And It is certainly in your best interest to compare quotes of different auto insurance companies before deciding upon a policy, and a premium, that fits your budget.
References:
http://www.carinsurance.com/Articles/content6.aspx
http://www.autoinsurancequote.com/articles/three-factors-that-can-raise-your-auto-insurance-rates.html
http://www.1888carinsurance.com/articles/10-factors-that-can-raise-or-lower-auto-insurance-rates.html
http://firstcarinsurance.org/5-factors-that-could-affect-your-car-insurance-rates-to-increase/