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5 factors that impact your car insurance rate

You may be wondering how car insurance companies calculate your monthly premium or why your monthly payments have suddenly increased. Simply put, car insurance quotes are determined by how likely you are to file a claim.

Insurance companies can determine how much of a risk you pose with the information you provide, combined with rating factors. If the probability of you filing a claim is high, you’ll pay more for insurance. If the likelihood of you filing a claim is low, you’ll pay less. 

5 factors that impact your car insurance rate 1
Factors Affecting Car Insurance Rates

Let’s take a closer look at the information that insurance companies use that impact your car insurance rates.

1. Your vehicle 

If your vehicle has a high safety rating, your insurance rate will be lower. Other security and safety features such as anti-theft devices, anti-lock breaks, airbags, and traction control may help you qualify for discounts on your premium. 

On the other hand, certain vehicles cost more to insure. Some cars are more attractive to thieves, and the higher likelihood of theft can drive your premium up. The age of the vehicle is also taken into consideration. Newer cars are more expensive to insure, while older cars may not need collision coverage if the car’s value is less than the deductible. 

2. Your driving record

A clean driving record helps you save on your insurance premium, while multiple claims filed on your record can significantly increase the amount you pay. New drivers who have not had insurance before typically pay more for insurance. 

There are options available for safe drivers to decrease their monthly payments, including usage-based insurance that uses telematics technology to determine driving habits and kilometres driven. 

3. The amount of driving you do 

Insurance companies typically view more kilometres behind the wheel as more exposure to risk. A long commute to work may cost you more for insurance, while only using your vehicle on the weekend will likely result in you paying less on your premium. 

4. Where you live and park your car

More collisions occur closer to home, so the area you live in can impact your rates. Urban neighbourhoods are known to have higher accident rates, theft, and vandalism than in rural areas. Where you park your car also plays a role; a car parked in a garage overnight is deemed safer than one parked on the street, where the likelihood of theft increases. 

5. Demographics

Your age, gender, and marital status can also impact your rates. Insurance companies consider the following statistics: 

  • Male teenagers are more likely to be involved in a collision than female teenagers
  • Older men are less likely to get into a car accident than older women
  • Married couples are less likely to get into a car accident

In general, younger drivers typically pay more to insure their car than older, more experienced drivers. 

Final thoughts 

Car insurance is a major expense for most people. Many insurance companies offer discounts and incentives to lower your rate, including insurance bundles, alumni deals, and group rates. 

Another significant factor that affects your premium is the type of coverages that you have. Talking to a broker can be beneficial to lower your rates while ensuring that you have all of the protection you need. 

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