Car Insurance Rates – Can You Lower Them?
If you're shopping for car insurance, you may have been told that by making certain changes to your vehicle like removing the aftermarket exhaust system or painting the rim gloss black, you can save money on your premium. The truth is, in most cases, these cost-cutting measures won't help much at all.
In this post we'll look at what really affects your insurance rates and how much these changes will actually save you. Read on to find out what factors go into calculating an auto insurance rate and get some tips for ways to reduce your premium without making any big modifications!
We'll also take a brief look at why so many people are considering dropping their car's comprehensive coverage.
How Rates Are Calculated
The cost of any automotive insurance policy is based on the probability of the insured person having an accident or filing a claim. The insured's driving record, age, type of car and use of the car all play a role in determining how likely it is to have an accident. Thus, these factors are all considered in calculating a premium (more about this later).
Many insurance companies give discounts for safety-related modifications that prevent accidents or reduce injuries if an accident does occur. Some common examples are anti-lock brakes and air bags. These are considered in calculating the premium.
Any changes made to the vehicle or its use should be explained on the insurance application. If they are not – and discovered later by the insurer – they will likely result in a refusal of coverage or an increase of premiums.
Factors That Influence Your Auto Insurance Rate
Your driving record: Driving records are an important factor in determining insurance costs. According to InsuranceQuotes.com, "the best way to keep your rates low is to have no accidents, tickets or moving violations." If you have a minor traffic violation on your driving record, it may not affect your rate at all, but certainly any major infractions will affect your rates.
Driving records are an important factor in determining insurance costs. According to InsuranceQuotes.com, "the best way to keep your rates low is to have no accidents, tickets or moving violations." If you have a minor traffic violation on your driving record, it may not affect your rate at all, but certainly any major infractions will affect your rates. Driving history: You may find that you pay more for car insurance if you have been convicted of a serious crime like DUI or even speeding tickets. The criminal penalties for these offenses can be severe and often include jail time or probation as well as larger fines and license suspensions.
You may find that you pay more for car insurance if you have been convicted of a serious crime like DUI or even speeding tickets. The criminal penalties for these offenses can be severe and often include jail time or probation as well as larger fines and license suspensions. Your age: Statistics show that younger drivers are more prone to accidents and less likely to have the experience to handle risky situations. According to Kiplinger, "age 16-24 is one of the riskiest stages to insure, with rates more than three times higher than those for older motorists." Conversely, over the age of 50 your chances of having an accident are much lower than drivers in their 20s.
Statistics show that younger drivers are more prone to accidents and less likely to have the experience to handle risky situations. According to Kiplinger, "age 16-24 is one of the riskiest stages to insure, with rates more than three times higher than those for older motorists." Conversely, over the age of 50 your chances of having an accident are much lower than drivers in their 20s. Car type: While it's true that many companies won't increase your premiums because you've traded up from a smaller car to a bigger one or downsized from an SUV to a sedan, there are some things you can do which will help your insurance rates as well as keep you safer on the road.
While it's true that many companies won't increase your premiums because you've traded up from a smaller car to a bigger one or downsized from an SUV to a sedan, there are some things you can do which will help your insurance rates as well as keep you safer on the road. Car modifications: Many people who use their cars for racing or other high-risk activities have modified their cars in order to make them go faster or handle better. Unfortunately, these same modifications can sometimes cause accidents. Talk with your insurance agent before getting involved in any of these activities and be prepared to document the changes you have made to your vehicle if they request it.
Some of the most common modifications that result in higher premiums are lowering the ride height and installing a lowered or raised suspension. If you have these installed, your premium will likely increase because insurance companies generally consider these modifications to be safety risks. But if you only use your car on the highway, they won't be considered much of a risk at all. Learn more about what really affects your auto insurance rates here.
Your location: For the most part, the location you reside in will not affect your rates — unless you live in a high crime area. According to Allstate, "the chance of your car being stolen or damaged by vandals depends on where you keep it parked… In some neighborhoods, one out of every three homes has had a car stolen from its driveway!"
For the most part, the location you reside in will not affect your rates — unless you live in a high crime area. According to Allstate, "the chance of your car being stolen or damaged by vandals depends on where you keep it parked… In some neighborhoods, one out of every three homes has had a car stolen from its driveway!" Car make: Cars manufactured by different companies can differ significantly in their use as well as the overall value. For this reason, insurance companies don't charge the same amount for a Ford or Toyota as they would for a Chevrolet. While insurers generally won't specifically charge more for a particular make, they may choose not to insure it at all if it is too high of a risk.
Cars manufactured by different companies can differ significantly in their use as well as the overall value. For this reason, insurance companies don't charge the same amount for a Ford or Toyota as they would for a Chevrolet. While insurers generally won't specifically charge more for a particular make, they may choose not to insure it at all if it is too high of a risk. Car type: Although most companies won't specifically charge you more in the case of switching cars, if you're switching between two different makes, your rates may be affected and they will likely require proof of the switch before approving your application.
Although most companies won't specifically charge you more in the case of switching cars, if you're switching between two different makes, your rates may be affected and they will likely require proof of the switch before approving your application.
Conclusion: If you're reading this, chances are you've made a mistake or two on your car insurance application at some point in the past. If this is the case, don't worry — it happens to us all and insurers are always looking for ways to build discounts into your rates.
The bottom line is that nothing will make you a better driver, keep your insurance rates low, or protect you from accidents or theft as much as being aware of what really affects your premiums. Learn more about how car insurance works here!
Sources: Allstate, Kiplinger Personal Finance, Wikipedia.