At Affordable Insurance, our aim is to give customers the insurance that best protects them at a cost they can afford. One of the most common reasons customers come to us is because they feel they are paying way too much for their coverage plan. Some extra charges are unavoidable, but others can be reduced by shopping around and making better choices. Here we will explain five reasons your car insurance bill is too high and some ways to reduce it.
- Your age
Unfortunately for young drivers, insurance rates are automatically higher if you are a teenager. Drivers between the ages of 16 and 19 years of age will pay the highest rates, usually more than double of any other age group. Young drivers have little experience and are statistically more likely to engage in reckless behavior behind the wheel. While not every young driver will drive irresponsibly, insurance companies are not willing to take that risk. Until a teen proves themselves to be low risk after a few years of driving, your rate will stay high.
There is no way to avoid the high cost of insurance as a young driver. Keeping your driving record clean and building up a good insurance history and credit rating will help to ensure that your insurance bill drops dramatically on your 20th birthday. Your car insurance premium should keep decreasing as you age, right until you hit your mid-sixties when it starts to increase again.
Some insurance companies give discounts to high school drivers that maintain high grades, so if you’re a parent of a teen, ask about possible discounts when you consult with your insurance agent.
- You are driving the wrong type of vehicle
You may be paying top-tier prices for your car insurance because you are driving a top-tier, high-performance car. Generally speaking, sports cars, specialty vehicles or limited production vehicles cost much more to insure. If your car requires expensive, imported replacement parts or specialized mechanic attention, insurance companies are going to increase your premium to reflect this. Additionally, high-performance vehicles are more associated with speeding and reckless behavior than, for instance, a family van.
After luxury cars, the most expensive types of vehicle to insure are ‘green’ or hybrid cars, followed by trucks, then sedans, with SUVs and vans being the cheapest. If you are serious about minimizing your insurance costs, you should choose an SUV or van with a high safety rating. Brand new vehicles cost more to insure, so it is worthwhile to consider buying one that is 2-6 years old.
- You opted for low deductibles
A low deductible means you won’t have to pay much out of pocket if you damage your car or somebody else’s. Unfortunately, the insurance company has to get the money to cover the damages from the client somehow. Usually, if you choose to have lower deductibles, your premium will be higher, and vice versa. It can be a tough decision to make. Nobody wants to have an accident and need to claim, but you must anticipate what would work best for your budget should that happen.
If you choose the highest deductible that you think you can afford to pay in the event of an accident, your premium should be reduced. Best case scenario, you get cheaper car insurance, and you don’t ever need to make a claim. Worst case scenario, you incur damages and need to pay the deductible, but it doesn’t break the bank. Your insurance will cover the rest, and the car insurance is still cheaper overall.
- You don’t have a clean record
Speeding tickets and other traffic violations can be an indication that you are a risky driver. Insurance companies will increase the cost of your premium without hesitation when they see anything but a clean record. To them, a history of imperfect driving indicates a future of imperfect driving. Drivers who receive tickets for speeding or cell phone violations will see an increase in cost the next time they renew their insurance coverage.
More severe citations, such as being found at fault for an accident or receiving a DUI will see your insurance cost rocket skyward. A single DUI will increase the cost of your insurance by at least 40% in one fell swoop. To keep your insurance cost low, drive safely, stick to the speed limits and obey the laws of the state you are driving in.
- Your credit score
Although it doesn’t directly relate to your driving ability or your insurance claim history, your credit score can have a huge impact on the price you pay for car insurance. Having good or bad credit can swing your insurance cost by 50% in either direction. Apart from the age of the driver or getting a DUI, it is the factor that has the most potential to hike up the cost of your premium.
Insurance companies have found that statistically, those with a lower credit score have a higher likelihood of filing a claim. Also, the resulting payout is double that of the average payout on claims filed by those with good credit scores. Looking at someone’s credit score is a good indicator of their risk. Insurance companies charge a lot more to insure drivers they think are risky and are likely to file a costly claim.
According to the 2016 Zebra State of Auto Insurance Report, drivers with an excellent credit score of 823 or more pay an average of $1130 for their yearly car insurance. Drivers with a poor credit score of 524 or below, pay an average yearly premium of $2411, more than double the cost of someone with excellent credit! Remember, car insurance providers will just look at your current credit rating, so if your credit score right now sits in the poor range and you improve it to the excellent range, you could save 50% on your car insurance instantly.
These are five reasons your car insurance bill is too high. There are an enormous number of factors that help decide the price of your insurance premium. Some of them, such as your age, you cannot change. Many of these factors, however, are at least partially under your control. Keeping your credit score high and your driving record clean are probably the easiest ways to reduce the cost of your insurance dramatically, but your choice of vehicle and deductibles can help too. For more inside knowledge on the insurance industry and help getting the best deal, call us here at Affordable Insurance.