Factors Affect Car Insurance Rates

Factors That Affect Car Insurance Rates

Motorists in Arizona have experienced a significant increase in auto insurance premiums over the past four years. Now, premiums are almost 30% higher. Many cars today contain new types of technology that can be expensive to replace if damaged in a car accident. For instance, almost all new vehicles are equipped with rear back-up cameras in the bumper. The cost of replacing one of these bumpers is significantly more than a bumper without a camera.

Catastrophic weather events such as Hurricane Harvey are also believed to be a contributing factor in car insurance increases. A testimony recently presented to the Department of Insurance, Securities and Banking reported that overall, there has been a 15% increase in insurance costs over the past two years.

Coverage & Deductible

All motorists are required to maintain their state’s minimum amount of liability insurance coverage. Car insurance rates increase as you add additional coverage which may include collision, comprehensive, personal injury coverage and more. Your deductible amount is a variable factor that impacts the policy premium. When you choose a higher deductible amount, your policy premium will decrease.

Choice of Vehicle

A vehicle’s safety rating will be factored into the calculation of your auto insurance premium. Vehicles are crash tested today more than ever and the insurance industry considers this and other safety data when calculating your insurance premium. Rates increase based on the value of your car to account for the possible replacement cost. Those who own cars that are commonly stolen can also expect to pay a higher car insurance rate.

Your Location

Insurers regularly collect and review the geographical data of their policyholders. This information is based on the zip code of their client’s home address. The data will show the frequency of car accidents and instances of crime such as theft and vandalism in the area. Those living in a rural area may receive lower premiums compared to those who reside in an urban area.

Driving Record & Claims History

Your driving record is one of the leading factors that affect your car insurance rate. Drivers with more than one traffic ticket or a DUI conviction will likely see their rates increase. Those who are found liable for an accident are also considered high risk. Many insurers promote good driver discounts to encourage responsible driving. Those with recent insurance claims are also going to be viewed as a greater risk. Drivers with a history of accidents or claims will see their premiums decrease after maintaining a clean driving record for several years.

Personal Demographics

Some of the most common variables affecting car insurance premiums are age, gender, and marital status. Those variables affect insurance rates because:

  • Car accidents are among the leading causes of death for those between 16 and 19 years old.
  • Data shows that younger drivers tend to demonstrate risky behavior and they have less practical driving experience.
  • At the age of 25, many drivers will see that their rates will decrease by almost 20 percent.
  • The Insurance Institute for Highway Safety (IIHS) explains that younger males are generally considered to be a higher risk. Young males tend to drive more miles per year. They are also more likely to drive at excessive speeds, drive without wearing a seat belt, and driving while intoxicated in comparison to females.
  • Elderly drivers often have higher accident rates due to poor vision and delays in their reflexes. Senior adults may see an increase in rates as they age, but usually to a lesser extent than teenage drivers.
  • Married drivers tend to pay lower auto insurance premiums. Massachusetts is one of the only states that prohibits insurers from including marital status in their rate calculation.

Credit History

Those with credit scores less than 579 will typically pay higher premiums. Some insurers may require those with poor credit to pay for their policies in advance. Policyholders with credit scores below 600 tend to file more claims and to file claims that are more costly.

Potential Discounts

Car insurance companies routinely advertise discounts for students who maintain good grades and for motorists who have a clean driving record. Other commonly advertised discounts target active military members and retirees. Many of the best discounts apply when you bundle or purchase multiple insurance policies with the same company. Insurance providers will bundle some policies such as home and auto insurance and give a discount for purchasing both. Those who purchase insurance that covers multiple vehicles can also expect a decrease in their rates.

Auto Insurance in Maricopa County

Olson Insurance Agency is a full-service insurance agency with an office located in Glendale, Arizona. We have ample experience in providing excellent customer service and support. Contact us today to see if you qualify for a car insurance discount or if you are interested in a car insurance quote!

Leave a Comment

Your email address will not be published. Required fields are marked *