Everyone who drives an automobile must have at least basic liability insurance. Those who drive vehicles that have been financed are also obligated to insure the vehicle against collision damage, theft, and other events that might reduce its value to the lienholder. What all this insurance costs is based on a number of factors.
Historically, men paid higher premiums than women, but as more women spend more hours behind the wheel, this gender difference is gradually changing. Anyone under 25 years of age will pay a higher premium due to the higher statistical likelihood of accidents among that age group. Married people will usually pay less than single people.
A big part of the premium is based upon the driving history of the insured. A clean driving record with no traffic citations or accidents will yield the lowest premium. Multiple citations, especially if they include a DUI, will often eliminate the possibility of coverage from a mainstream insurer, and force the driver to obtain coverage from a high-risk pool at a substantially higher premium.
Type of usage is another factor affecting premiums. A driver who is traveling only a few miles a day will receive a better premium than the driver with a long commute or someone who drives all the time for business. The longer you’re on the road, the greater the chance of an accident. Some drivers pay a higher premium based on what they do for a living.
Having good credit can save you money. Insurers view drivers with a poor credit history as a higher risk and charge a higher premium accordingly.
Where you live also affects rates. High-density metropolitan areas are more costly than less populated rural areas. State specific laws can also push rates higher or lower. According to a 2010 survey of rates by Insure.com, Louisiana drivers are paying the highest rates and Maine drivers the lowest.
New vehicles cost more to insure than older vehicles and more expensive vehicles cost more to insure than budget-conscious vehicles. It’s all about repair costs and how much the insurer has to cover if the vehicle is totaled.
Discounts are available in specific instances. Some insurers offer discounts for theft deterrent devices. Students may be eligible for discounts for good grades or having completed a driver’s education class. Families insuring more than one vehicle may qualify for multi-vehicle discounts.
If you ask for quotes from five different insurers, you’ll see a wide range of rates. It’s smart to shop around, but make sure you’re being quoted on equivalent coverage.
Insurance companies look at numbers. If their numbers show that you’re a higher risk, they will quote a higher premium. If you’re a responsible person with a decent driving history and a good credit rating, the numbers will be in your favor.