Why Has the Cost of My Auto Policy Premium Changed?

Ever wondered why the cost of your auto policy premium changes? One year the cost of your premium might be one rate and when you go to renew or insure a new car, that cost is completely different.

You may be surprised to find out how many factors insurance companies consider when determining the cost of your policy, several of which are unique to you and your vehicle. As a result, you may notice that your auto policy premium goes up and down throughout your lifetime.

Here are just a few of the many factors that may impact the cost of your auto policy premium:

Driving Habits

Your personal driving habits can impact the amount of your policy. Here are a few of factors related to your driving habits that insurance companies consider when pricing your policy:  

Accident History: If you have been in several accidents, your premium is going to be higher than someone who has been in few to none. How far back these accidents occurred also matters. As the accidents get further back in your history, your premiums should go down.

Annual Mileage: The cost of your policy is also determined by the number of miles you drive annually. This is based on the fact that the more you are on the road, the more likely it is that your car could be in an accident and visa versa. If you change jobs and your commute gets shorter or you find you are driving much less, let your insurance agent know. Having a lower annual mileage could help lower your policy cost.

The Car You Drive

The car you drive also impacts the amount of your policy. Here are a few of factors insurance companies consider about your car when pricing your policy:  

Age of the Car: You may have noticed that getting a new car can increase your auto insurance policy rate. Older cars tend to cost less to insure than newer cars because their replacement cost is much less in the event of a collision.

Value & Repair Costs: If you drive a car with a higher purchase price or one that is more expensive to repair than others, your policy cost will be higher.

Likelihood of Theft: Believe it or not, if your model car is more likely to be stolen than other models, it may come with a higher insurance premium. However, having anti-theft car features can help lower the premium.

The Driver

The demographics of the driver can also impact the amount of your policy. Here are a few of factors relating to the driver that insurance companies consider when pricing your policy:  

Marital Status: Married people have been found to have lower accident rates than single people and get lower auto insurance policy premiums as a result. That wedding may have been expensive but you could save on your auto policy!

Gender: According to accident statistics, young males are more likely to get into accidents than young females. Because of this, young male drivers can be more expensive to insure than young female drivers. There are however, a handful of states that do not allow insurance carriers to base rates on gender.  

Age: Younger drivers and much older drivers have higher accident rates and therefore higher insurance premiums. You will likely pay quite a bit more for “newer” drivers under the age of 25. However, once they are over the age of 25, their premium can drop significantly.  

Ways to Get Discounts

You may not be able to control of some of the factors above that determine your policy premium but there are a few things you can do to lower your premium:

1. Bundle Your Insurance Policies: Bundling your auto insurance policy with your other insurance policies can amount to savings on all of your premiums.

2. Take a Safe Driving Course: Completing a driver’s safety or defensive driving course can make you a better driver and lower your policy premium.

3. Show Off Your Student’s Good Grades: Insuring your teenage driver? If they have good academic standing, you could get a discount on your policy.

If you have questions about your current policy or the cost of a new policy, reach out to one of our insurance agents and we can walk you through it and help find ways for you to save.

Source: https://www.iihs.org/iihs