Insurance premium is the money you need to pay or deposit, whether as a lump sum or in installments, to the insurance company while buying an insurance policy. This may be referred to as one kind of security money. But this is the main source of income for that insurance company. The amount of insurance premium is not fixed for any particular type of coverage. For example, the amount of Insurance Premium for a car varies from person to person. It depends on several factors like the cost of the car, history of driving related accidents of the owner etc. In recent times, insurance premium has increased significantly in all of the states. To avoid a higher car insurance premium, you need to know about the important parameters of car insurance.
Important factors related to car insurance premiums
- Credit Score: Your credit card history is very important if you are going to buy an insurance policy. Insurance companies analyze many things before an insurance contract is signed. Credit score is one of the most important factors that influences the insurance premium. For almost all instances, a bad credit score is an indication of a high risk customer for the insurance providers.
- Variables of a car insurance premium: There are several other factors that determine the amount of a car insurance premium. The common factors are: the type of the car, the company that built the car, the parts of the car, the mileage driven by the car. Some insurance providers also consider the age of the driver, the expertise of the driver, etc. These factors are considered to determine the risk value of the car insurance. Insurance companies might also consider the employment history of the drivers.
Why is car insurance premium rising?
According to the report from Bureau of Labour, Car Insurance Premium has increased about fifty percent from 2006 to 2016. There are several reasons for which your car insurance premium may rise.
Rising Cost of Repair: The cost of repair is rising everyday as well as the price of spare parts. Therefore, when a claim is made, the amount tends to increase with time for similar kinds of damages. So, insurance companies try to keep pace with the increasing cost by increasing the insurance premium.
Car Accidents: The rate of car accidents is increasing day by day. The price of gas is lower. So, drivers tend to drive more miles than before and drive recklessly. Technology also plays a role in the increased number of accidents. There is a noticeable behavior among drivers in recent times. They drive while checking their social media accounts like Facebook, Instagram, Twitter, Snapchat, etc. This misdeed and reckless driving leads to accidents. Increased numbers of accidents are one of the many reasons for the uprising car insurance premium. Insurance providers increase the premium due to the high-risk value.
Medical Bill: Car insurance also covers the medical bill of the injured persons. As the medical bill is increasing day by day, the car insurance premium rises along with it.
Experience: Experience is also an important factor in car insurance premiums. Insurance providers may often analyze the age and skill of the driver. If the driver’s license is new, the insurance provider will definitely try to issue a higher insurance premium. New drivers cause more repairs than experienced drivers. Speeding tickets also have an impact on the car insurance premium.
Lower Credit Score: As discussed above, credit score has a big impact on the car insurance premium. Before you go out and buy a car insurance premium, you need to make your credit score look good. Frequent transactions and payments will help you achieve a good score. Good credit scores will help you get car insurance with a lower insurance premium.
Increased Number of Cars: With the improvement of life expectancy, more and more people are buying cars. Besides, the needs of official duties and industrial transport is increasing exponentially. This way, there are more cars on the road and more chances of accidents. This is also a major cause of an increased insurance premium.
Moving to A New Locality: If you want to or have to change your residence, there might be an impact on the insurance premium. If the new neighborhood is more violent and more prone to auto theft, the amount of risk involved increases as does the insurance cost.
New Drivers: If you are switching from your parents policy and decide to buy an auto insurance policy for yourself, you may find a significant increase in the insurance premium. There can be a number of causes for this. Your parents may fall under certain discounts that do not apply for you. Insurance companies offer discounts for multi insurance policies, or as a new driver, you are comparatively a higher risk client. The rate of accidents among young male drivers aged between 20 and 29 is much higher than that of drivers above that age limit.
After considering all these factors, you can take some initiatives to lower your insurance premium. Some of these are unavoidable, but if you know your way or you are in touch with an honest professional auto insurance agency like Chapman Insurance Group, you might enjoy a sweet deal with a lower premium cost. After thorough assessment, if you increase your deductibles and shop around for deals that best suit your needs, you will be able to save a lot of money on your Auto Insurance Costs.