Top Five Areas That Can Increase Vehicle Insurance Premiums

From the loan, gasoline, routine maintenance, and repairs, a vehicle is often an expensive item to own. Another expense is insuring the vehicle, a cost that varies greatly. For example, those with an excellent driving record and that own an older vehicle will usually find the expense relatively small. On the other hand, for those that have a driving history with traffic violations, the monthly cost of auto insurance can easily surpass $200.
Drivers need to know what causes premiums to rise before they can avoid costly premiums. Here are five of the most common contributors to higher premiums:

1. Traffic Violations/Accidents

Although some drivers don’t make the connection between their driving habits and insurance premium rates, the reality is that insurers consider a good driving record as an essential element in obtaining the best auto insurance premiums. Of course, insurers understand most drivers are bound to have a traffic violation or accident at some point. Therefore, most insurers don’t make substantial increases to insurance premiums for a single incident. However, insurers are very likely to make increases when a driver has multiple accidents and/or traffic violations on their driving record. In fact, the insurer may even decline to renew the policy of such a driver. Drivers dropped by an insurance company may find it very difficult to find an affordable policy through a different insurer. On the other hand, drivers with a good record should periodically review their policy to see if they qualify for any premium decreases.

2. Expensive Vehicles

Most insurers will base a driver’s monthly premiums on what the vehicle to be insured is worth. Therefore, the premiums will be lower on an older vehicle or less expensive newer vehicle than on a brand new or more expensive vehicle. Another consideration is whether or not the vehicle is a considered a sports car or not. These cars typically have higher premiums due to the increased risk of accidents from faster driving speeds.

3. Deductible

A deductible is the amount the policy holder must pay out-of-pocket before the insurance company will pay a claim. The amount of the deductible varies per policy, but is usually either $500.00 or $250.00. While many drivers are tempted to opt for a policy featuring the lowest deductible, some may find it to their advantage to have a higher deductible. For example, those with poor driving records will already have higher premiums and can lessen their monthly payment by $50.00-$75.00 per month by opting for the $500.00 deductible.

4. New/Teen Driver Additions

Insurance quotes can be at their highest for teens and new drivers, often to the point the coverage is simply unaffordable. Quotes for a teen driver are usually substantially less when it involves being added under a parent’s policy. That said, it will still be a significant monthly increase to the parent’s policy.

5. Failing To Compare Prices

Since insurers use different criteria to establish their premium rates, it’s always vital to compare quotes from various insurers. This is true whether a driver is obtaining their first auto insurance policy or periodically reviewing their existing insurance coverage. Keep in mind that larger insurance companies with recognizable names offer high-quality services, but at a high premium cost. Smaller insurance companies are less recognizable, but often offer the same services at a lower premium cost.


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