Have you ever looked at your insurance rates and thought: “dang, that’s a lot of money”. It’s not an uncommon experience but why does it happen? What things actually contribute to making your insurance premium quite so high. There are several reasons and none of them will explain it all but here are some of our best theories.
Driving Record
Your driving record is a key part of the calculations that go into your insurance premium which means there’s 2 ways it could be driving up the cost of your insurance. The first is the obvious one, if you have any accidents or collisions or tickets on your record then your insurance is going to cost more because that shows to them that you are a dangerous driver.
The second is that if you’re still new to driving then you may not have a record at all yet and insurance companies don’t like that at all. Generally you’ll see a huge hike in insurance rates until you’ve been driving for at least 5 years.
Where You Live
You might not think of it but where you live is actually another key component of your insurance premium to a very specific degree. Moving a few streets over could even have a significant effect on your insurance. Generally the definitive factor here is the typical rate of accidents in the area where you live and work which has a correlation with denser urban areas.
The closer you live to the city center the more expensive your insurance will be, and vice versa.
Car Type
The type of car will also have an effect on the premiums you’re paying, and not just the price, though obviously a more expensive car will be more expensive to insure. Like the location these numbers are going to be based on accident statistics though this time based on the type of car.
For example: sports cars generally get hit with higher insurance rates because statistically they are involved in the most road accidents.
Your Policy
The insurance policies you choose will all affect exactly how much your premium costs, sometimes in mysterious unknowable ways. Anything you add or subtract from the policy could have a significant effect on the premium.
If you choose a lower deductible that will increase your monthly insurance rates. If you’re adding other drivers onto the cars insurance that will have a significant effect on the premiums, especially if their records aren’t as stellar as yours. Even the optional extras like “free towing” could have an effect on your rates.