Car insurance is required by most states, including the state of Arizona. In Arizona, 12% of motorists are uninsured. This fact makes it more costly for the rest of Arizonans to have insurance. In addition, in 2011 there was an estimated statewide economic loss of 2.9 billion dollars. These facts show the essential nature of car insurance. However, it can be an additional expense that is frustrating for consumers. Here is a look at why the insurance industry prices the way they do, and ways that a consumer can save money.
Statisticians are the main winners in the insurance market because they are paid to determine the risk versus reward of the Insurance company when choosing to insure a consumer, and the price point is basically a balance of the risks and rewards. For instance, if a person parks their car on a city street, the risk of damage is going to be far greater than if the car is placed in a garage in a safe suburban neighborhood. Young male drivers tend to have more accidents than any other driving population. Cars that travel long distances daily for commutes tend to be in more accidents than short drive cars. The cars that are coming out on the market are more fancy, with more amenities, and that leads to cost more to repair. All of these factors and more add to the ever-increasing cost of insurance in this country.
Statistical analysis is done on accidents in a given area, accidents by age range, accidents by gender, and accidents by car type. The analysis is also done to determine if your own driving record also adds to the chances of you getting in an accident. Additionally, the amount of driving a person does increase their risk of a car accident. The United States has a lot of commuters, and people are living places far away from work, which increases mileage driven. These factors will lead to an increase in the cost of car insurance. They even analyze your credit history. In many ways, the choices that a person makes of where to live, where to drive, and what car they purchase have a direct effect on the price of car insurance. Because city populations are growing, there are more people adding to the areas that could lead to accidents. This is why living in a large city like Phoenix you are likely to have higher insurance premiums than small towns.
Here is a list of ideas to help you when you are looking to save on insurance costs:
1. Shop Around The first and most important is to shop around. Many different companies exist, and they all use this analysis quite differently. Look into many companies and determine which rates might fit your budget and have the amenities that you would prefer. Understand that the more perks you want in an insurance policy, the more likely you will be paying a higher premium.
2. Bundle Find out if you can bundle with other insurance policies that you need. Many companies offer discounts if you get homeowners insurance or renters insurance along with your car insurance.
3. Look at your options Consider the car you are driving and where you park it. If you have the capability to park your car off the road, you could likely save a great deal on insurance.
4. Driving record If at all possible, clean up your driving record. See if you can find a way to take a class or other means to remove negative traffic violations from your record. Work on developing good driving habits to avoid future accidents or violations.
5. Public transportation Can you use public transportation or carpool? Again, limiting mileage can also improve the cost of car insurance for a consumer, and utilizing other means of transportation may also increase the safety and protection of the car.
6. Policy sharing Can you share a policy with a spouse, parent, or relative? In insurance decisions, numbers matter. The more people enrolled in a particular insurance product, the less the risk is for the company because the cost becomes more evenly spread out.
7. Policy Sharing If you have had a clean record, drive less than others, and have a sensible car, can you choose a higher deductible that would lower your premiums? If so, the cost savings could be significant.
Costs associated with insurance can seem high, and choosing the best insurance is daunting. The cost of living in Arizona continues to rise, and with it, the costs of insurance are likely to as well. Working with a professional insurance agent can help you find out what products are best for them, and can help them make wise choices for their financial situation and needs. Understanding how insurance works, what it is used for, and why the costs are what they are can help you make informed decisions on saving money and protecting the investment of your car.