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Car insurance companies take many factors into account when determining what premiums the insured will pay. Everybody does not pay the same premium. You pay a premium based on what the company assesses as the possible risk you pose. Are you a driver who is likely to file a claim? When deciding this question, insurance companies require information ranging from your driving record to your age to safety features on your car. Other information considered is how many cars are covered under the policy, the type of car insured, the amount of driving your do, and where your car is located.
Multiple cars or policies. When you have more than one car on an insurance policy, most companies will give you what is known as a multiple line discount. Because you use the company for all of your auto insurance needs, they reward you. Plus, multiple vehicles means that chance of you getting into an accident with one particular car is reduced. In addition to cars, many insurance companies offer life insurance and home or renters insurance. Buying multiple policies from one insurance company can lead to discounts on all of your premiums.
Make and model of your car. Every year vehicles receive safety ratings and are ranked according to how likely targets they are to thieves. Additionally, there are many cars that are considered to be more likely to be handled irresponsibly, or that can cause great damage to other cars. Sports cars, some SUVs, bright red cars and black cars are considered risky. Additionally, cars with higher safety ratings cost less to insure, as do cars that are low on the theft list.
Distance and amount of driving you do. Most car insurance companies ask prospective clients how far, and to where, they do most of their driving in a day. The thinking is that further you have to drive, and the more often you do it, the more likely you are to have an accident. The person who commutes 45 minutes to work every day is going to pay more than the person who drives 10 minutes to work. Likewise, a college student who walks to class, and drives home three or four times a year will cost less than the college student who spends 30 minutes commuting to and from campus each day.
Location of your car. Car insurance companies rate areas according to the number of accidents or thefts that occur in a specified amount of time in that area. Sometimes, the company can even pinpoint a neighborhood. If you live in a large city, your rates will be higher than if you live in a town. Additionally, if there are multiple thefts or car vandalisms in the area in which you live, you are more likely to pay a higher insurance premium.
There are very few people who meet all of the criteria for having a perfect insurance rate. However, if you know what car insurance companies consider when setting premiums, you have a better idea of the things you can do to reduce your premiums. For the most part, being a safe and responsible driver, and taking good car of your car, will help you keep your premiums low.