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Many people face increases in auto insurance premiums each year without knowing how to stop the increases. There are a number of factors that can negatively affect the premiums paid for car insurance. Knowing these factors and managing them can make a big difference when it comes time to renew your policy.
The make and model of your car have a big impact on your premiums. In many cases, the more expensive cars are more expensive to insure. This is because replacement parts and labor are more expensive. Safer cars, even if they are larger, can lower premiums because drivers and passengers are less likely to be killed or seriously injured in these cars.
Personal driving history has a dramatic effect on premiums. Accidents can and often do increase your premiums, and too many accidents can result in a policy not being renewed. Traffic tickets not only cost you money when incurred, but are tracked by insurance companies. Drivers who receive tickets are considered higher risk and cost more to insure.
In most cases, cars get cheaper to insure as they get older. At a certain point, the replacement value of an older car is low enough that collision coverage is not needed, since the premiums would be higher than the cost of buying an identical car of the same age.
The number of miles driven in a year is a question that insurers ask. This is because a car in the driveway has a much lower risk of being in an accident than a car in traffic. People who work at home and only drive for pleasure will save much more than people who travel twenty or thirty miles or more each day.
Similarly, a car owner who lives in a rural area will have lower premiums than one who lives in a high-traffic urban area. This is due not only to the higher risk of accidents in urban areas, but also to the higher rates of car theft in urban areas. Some people in urban areas incur a very high transportation cost, including parking fees, and some choose to rely entirely on public transportation.
The age of the driver is another factor in setting rates. Younger drivers are more expensive to insure as they tend to have more accidents than older drivers. Older drivers are safer and more experienced drivers in most cases. These higher rates can be offset somewhat if all drivers in a household have the same insurance policy, which results in a multiple driver discount.
Every driver needs insurance, but hopes they never need to use insurance coverage. Taking the time to understand the factors that drive increases in auto insurance premiums can help a consumer save a great deal of money on insurance.