Insurance can be one of the costliest aspects of car ownership. The good news is there are things you can do to reduce the amount you’ll pay for coverage like simply switching to Understanding how your car insurance rates are determined is an important aspect of accomplishing this.


The key factors include:


Your Driving Record


Insurance companies are all about managing risk. One of the first things any car insurance agent will do is contact the DMV to get a copy of your driving record. You’ll be considered more of a risk if you’re frequently caught engaging in — shall we say — spirited operation of your vehicle. As a result, the insurance company will want you to pay more for coverage to reduce the risk they assume on your behalf.


Your Car


A straightforward four-door family sedan or SUV will cost less to insure than a fire-breathing two-seat sports car. In fact, regardless of the type of car, if you get a more powerful variant, or one with more luxury features, you’ll be asked to pony up more cash for coverage. Another factor in this regard is the cost of repairs. It’s cheaper to fix a Chevy Malibu than a Ferrari California Spyder. Similarly, paying out a total loss claim on a Mustang will cost less than replacing a Porsche 911.


Leasing vs. Buying


Leasing contracts require carrying the maximum limits of liability. You’ll also be required to have full coverage. Another element that comes into play whether you’re leasing vs. buying a car is gap insurance to make up the difference between the actual market value of the car and what might be owed if the loan amount is greater in the event of a claim.


Age, Gender, Marital Status


Younger people usually have less experience and take more risks (there’s that word again). Males tend to drive more aggressively than females and married people generally demonstrate more responsible behavior regardless of gender. However, these factors often carry less weight if your driving record is exceptionally clean.


Your Annual Mileage


The more your car is on the road, the greater the likelihood it will experience some sort of a claim, whether it’s an accident, theft or vandalism. The more miles you drive each year, the more your insurer will want you to pay.


Your ZIP Code


Busy urban areas mean elevated risk for your car in the eyes of a carrier. Quiet suburbs usually mean a car is subjected to less risk. Cars are stolen in the city more often than in suburban or rural areas. More traffic means the likelihood of an accident are higher. Other related factors include whether you park in a garage or on the street.


Your Deductible


This brings us back to the extent of the risk you’re willing to assume on your own. A deductible is the amount you’re willing to pay out of pocket to resolve issues before you call upon the insurance company to kick in some cash. The higher the deductible you choose (the more you’re willing to pay on your own) the lower your premiums will be.


Type and Amount of Coverage


Carrying certain forms of insurance is a waste of money if you’re driving an older car with next to no value. You’ll always want to carry liability just in case you hit someone. However, collision can be foregone if the value of your vehicle is especially low. After all, anybody that hits you should have liability; which negates your need for collision.


The factors above all go into determining how your insurance rates are determined. Paying careful attention and applying them strategically can save you money.


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