THINGS THAT AFFECT THE COST OF CAR INSURANCE. PART ONE: DRIVER FACTORS

Car insurance is a big expenditure, but in most countries it is obligatory to have it. Good news is that when you know what factors an insurer takes into account while establishing the price of the policy, you may take some steps to reduce it. Find out what affects your rates.

How Is Car Insurance Calculated?

While determining the amount you’ll pay for your car policy, an insurer makes an assessment on how much risk you are causing to the company. The insurer estimates how likely you are going to make a claim and how expensive that claim can be in your particular case.

While estimating how much risk you create, an insurance company takes account of various factors, related to you as a driver and also to your car. Besides, the price of the policy depends on payment conditions and discounts you may benefit from.

Driver Factors – What Affect the Price of Car Insurance

If you know exactly what factors are taken into consideration by insurers, you may take some steps to lower your insurance rate. Of course, you can’t affect each one of the factors, but improving at least some of them can seriously lower your rates. Below we present driver factors: those are components related to you as a driver.

Gender

In some states in the USA, it is forbidden to use the information about someone’s gender to estimate the risk he or she is causing. Although in general gender is an important factor taken into consideration by the insurers in most countries.

As you may know, crash statistics are different for males and females. In general, men are more likely to crash, especially when they are young and novice drivers. According to data provided by The Insurance Institute for Highway Safety, men are driving riskier than women – more often they are speeding, driving when intoxicated and not using a seat belt. What is more, when male driver crashes it is often more severe than female driver’s crash.

Fortunately, all these differences change with age – when males and females become middle-aged, let’s say, when they are about 40 years old, the statistics become comparable.

Age

Age is the next factor which is forbidden in some USA states. Although comparable to gender factor, most companies in most countries treat it as an important information which impacts the price of the insurance.

Studies show that young and fresh drivers – those, who just got their driving license – have more accidents than experienced, older drivers. Statistically, novice drivers tend to be immature behind the wheel: they are easily distracted and not very responsible, and as a consequence, they crash a lot. Especially drivers who are under the age of 20 are offered the highest premiums. Novice, under 20 drivers, are considered the riskiest category of all the drivers to insure.

If you are a young driver, there is nothing you can do about it. Go for a car with a smaller engine and lower your rate by that. Driving safely will make your premiums go lower in the nearest future. Rates drop generally when you turn 25.

The story repeats itself when you turn into a senior driver. Elderly drivers are the next risky category because statistically, they have a slower reflex. U.S. Centers of Disease Control revealed, that the risk of being seriously hurt or killed in a car accident increases with your age.

According to The Insurance Institute for Highway Safety, drivers at the age of 30 to 69 are those who pose the least risk. They are less likely to crash compared to younger and older ones. This age group is offered with the lowest car insurance premiums.

Profession

Insurance companies also assesses how your profession impacts your driving style and the time you spend on the road. They have statistics which say how likely people in your profession are going to crash and if they are considered careful drivers.

Representatives of professions that are constantly on the road, like journalists, traveling salespeople, delivery drivers, are considered to be more likely involved in an accident because they drive a lot. On the contrary, police officers, paramedics or nuns are perceived as very careful drivers and thanks to that they can count on a better price.

What’s interesting, also footballers are offered with higher premiums because they are considered risky drivers.

Education

Some companies offer a discount based on a level of our education. The higher our level of education is, the bigger discount will be offered to us.

If you are a student, most insurers will provide you with a discount thanks to that fact. To get it you only need to maintain good grades.

Marital Status

Statistically married couples tend to drive safer than single people. These statistics include also divorced and widowed people. They also have fewer accidents and lower claims. According to the National Institute do Health, singles are twice as likely to be involved in a crash than married ones.

Thanks to that fact married people will be offered the discount on the amount of 5-15%. Getting married will lower the rate especially for men. Sometimes even younger drivers can count on a lower price if they are already married.

Geographical Location

For an insurance company, it is important where you live and where you park your car. Insurers study every detail of a neighborhood you live in. They make an assessment on crime rates, number of claims made annually in your neighborhood, weather patterns, and every neighborhood details you may even not know about.

You may not know that, but differences in price can be spotted even in one city. If you live in a densely populated neighborhood you are at a higher risk of accidents and collisions because statistics show that most traffic accidents happen close to home. Some neighborhoods have also a higher risk of theft or vandalism. Areas with high unemployment rates and where many uninsured drivers live are also more expensive in case of insurance.

These are the factors connected to you as a driver. If you want to know how your driving style or experience affects your insurance rate, next month we will post an article: “Things That Affect the Cost of Car Insurance. Driver Factors: Part 2”.

Author: Olga Gierszal